On Politics On PoliticsOn Politics
Analysis and perspective about what's happening in the political realm.

Sunny-Side Up

ARCHIVES

It seems eerily appropriate that on the day we observed George Washington's birthday, another revolution was taking place, this time in Libya. In what might be the third such toppling of a government in less than two months, we are witnessing more iconic scenes on television of city squares filled with people demanding change. Footage of two Libyan fighter pilots dismounting their aircraft and defecting to Malta after being ordered to bomb and strafe their fellow citizens was a scene that many of us will not soon forget.

Even the smartest foreign-policy experts and intelligence analysts could not have predicted such a turn of events. Who could have anticipated the ripple effect triggered by a street vendor in Tunisia who set himself on fire to protest what he saw as corrupt city inspectors? These are the kinds of occurrences that former Defense Secretary Donald Rumsfeld might call "unknown unknowns."

In the category of "known knowns" is the U.S. economy, a critical element in next year's presidential contest. When an incumbent is seeking reelection, voters' decisions are not choices akin to deciding between strawberry or pistachio ice cream but rather a referendum on the sitting president. "Do I want to vote to reelect President Smith or not?" The choices are actually "yes," "no," or "I don't know." If a voter's response to that question is yes, that person will almost certainly vote to reelect the president. If the answer is no, then unless the opposition party chooses a nominee who is either offensive or grossly unqualified, the voter will choose that nominee.

Although many factors are involved, we know that more than anything else, people vote their pocketbooks. If they think the economy is good or getting better, they're more likely to vote for the incumbent. If they think the economy is bad, getting worse, or maybe isn't getting better quickly enough, they're more likely to vote for the incumbent's opponent.

That's why I have been watching economic indicators and forecasts closely in recent months, looking for clues as to where the economy is going and how voters will perceive President Obama's stewardship of it in the closing months before the 2012 election. To be sure, the verdict for Obama at the time of last November's midterm was not good. But that does not mean voters will look at the situation the same way in the fall of 2012.

A rough rule of thumb is that if unemployment is at or near 9 percent, it will be a bad omen for Obama. But if the figure is at or close to 8 percent, it will be good news for the president, because the jobless rate will have improved significantly from its 10 percent level at the end of 2009. Some voters will reward Obama for progress on unemployment rather than punish him for policy or priority disagreements they may have had with him during his first two years in office.

It's extremely unlikely that we'll see an improvement along the lines of what President Reagan enjoyed when unemployment dropped 3.6 percentage points, from 10.8 percent in November 1982-his first midterm-to 7.2 percent in November 1984, when he was reelected. But a drop from the 10.1 percent mark that we had in October 2009 to 8.2 percent or so might be good enough to give Obama a second term.

Last week, the Federal Reserve Board released the minutes of the January 25-26 meeting of the Fed's Open Market Committee and a summary of economic forecasts provided by members of the board of governors and the presidents of the 12 Federal Reserve banks. Several times a year, each committee participant is asked to provide a forecast of various important economic measures, including gross domestic product, inflation, and unemployment. The minutes reveal the highest and lowest forecasts for each element, as well as the "central tendency," which is the range after the three highest and three lowest forecasts (read: the outliers) are removed.

The forecasts for GDP growth in the last quarter of 2012 range from a low of 3.4 percent to a high of 4.5 percent; the central tendency is between 3.5 and 4.4 percent. The range for unemployment is 7.2 percent to 8.4 percent, with a central tendency between 7.6 and 8.1 percent. The forecasts from the Fed are more optimistic than the latest Blue Chip Economic Indicators survey of private forecasters, who are suggesting GDP growth of 3.3 percent and an unemployment rate of 8.3 percent in the fourth quarter of 2012.

Of course, plenty of noneconomic factors will be weighing on voters' minds, including foreign policy. Whom Republicans nominate is certainly relevant, as well. But the economic indicators are looking far better for Obama today than they did six months ago, and they seem headed toward a place where presidents tend to get reelected.

 
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download
  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care

    Download

When you download a report, your information may be shared with the underwriters of that document.