The economy and the 2010 election (with graphs!)
As we edge closer and closer to the midterms and people like me keep saying that the main thing that matters is the economy; both its absolute performance over the past 14 months and its apparent trends. But why say it when you can graph it? With the help of Dylan Matthews, I pulled together a few different ways of looking at the Obama administration's economic record. We'll start with the one that matters most to people: Job growth (source: Steve Benen).
Next, housing prices. Note that this graph, which uses Case-Shiller data, runs back to 1988. You're looking for the performance at the right edge, beginning in January of 2010 (Source: Calculated Risk).
The Dow Jones Industrial Average:
The Libor, which is the interest rate at which banks lend to one another and is generally considered a measure of financial risk. Its 2008 spike was among the most unexpected and terrifying indicators of the crisis.
And, finally, GDP. A quick note on this graph: The data is quarterly, so the dot in April of 2009 is covering January, February, and March of that year, which is to say, the start of the Obama presidency.
The trends in all these cases are good. Very good. That isn't to say the actual condition on the economy is good. A month of robust job growth doesn't nearly compensate for a year of accelerated job loss. And so long as we're talking about the elections, I should add one more graph. This sucker comes from CBO and tracks revenues and outlays. When the dark blue line jumps above the light blue line, we're running a deficit.
This graph is a political problem for the Obama administration (if not, in the short-term, an economic problem). But it is also necessary for all the other graphs. The bank rescue, which added temporarily to the deficit, stabilized the stock market and set the stage for its recovery. The stimulus, which also added to the deficit, helped moderate the job losses and and has contributed to recent gains. You could've made the lines on this graph better, but only by letting the lines on the other graphs get worse.
But though the country may like Keynesian economics in practice, they don't like it in theory. Government deficits, particularly with the backdrop of the bailout and the sense that normal Americans are still tightening their belts, are unpopular. The Obama administration's hope is that the other graphs on this page keep heading in the right direction, and with the economy feeling better, the deficit recedes as an issue. Politically, the GOP needs the recovery to be too slow and halting to really touch people, thus preserving popular anger over poor economic conditions and high deficits and returning them to power in 2010.
Update: Folks wanted a graph on unemployment rates, too, so I've added one:
You'll see I've got two rates on there: The first is the normal unemployment rate. The second is "U6," which is a broader measure of employment distress. It includes "marginally attached workers and those working part-time for economic reasons."
That said, if I were creating a set of political-economic dashboard measures, I wouldn't add the unemployment rate for a couple of months yet. Employment is a generally lagging indicator. It comes back after GDP growth and job growth have already been going for awhile. So though the amount of employment distress in the country will be very important come the 2010 election, what you want to be watching are the factors that will decide the unemployment rate (and its trend) come November, not what the unemployment rate is right now.
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