Obama and future economic growth

Paul Krugman discusses the implications of a likely post-housing bubble hangover for Barack Obama:

If the current slump follows the typical modern pattern, the economy will stay depressed well into 2010, if not beyond — plenty of time for the public to start blaming the new incumbent, and punish him in the midterm elections.

To avoid that fate, Mr. Obama — if he is indeed the next president — will have to move quickly and forcefully to address America’s economic discontent. That means another stimulus plan, bigger, better, and more sustained than the one Congress passed earlier this year. It also means passing longer-term measures to reduce economic anxiety — above all, universal health care.

There are two ways to look at the problem for Obama (assuming he wins). On the one hand, Princeton's Larry Bartels has found that Democratic presidents tend to produce big economic gains early in their terms but weak election year growth, while Republicans tend toward the converse. Given voters' bias toward short-term performance, the result has been that Republicans have overperformed in presidential elections relative to their overall economic achievements. The housing slump makes it likely that Obama will avoid this pattern simply because the economy is unlikely to quickly bounce back.

On the other hand, however, it's quite plausible that the economy will remain stalled through 2012 or later, making it difficult to carry out a "Morning in America"-style re-election campaign. Once you take into account the various booby traps that President Bush has left for his successor (Iraq, expiring tax cuts, etc.), it's clear that Obama (or McCain) could have a very difficult first term in office.