Obama advisers looking for wrong lessons

According to New York Times columnist David Leonhardt, President Obama's advisers are seeking inspiration from the campaigns of presidents who were re-elected despite increased unemployment:

Mr. Obama’s advisers, meanwhile, are looking for lessons from re-election bids that overcame a first-term rise in unemployment, like those of George W. Bush, Richard Nixon and Dwight Eisenhower, Republicans all. That’s a turnabout from the Obama team’s initial plan to base its re-election campaign on the economy’s progress since 2008.

The problem for Obama is that the first terms of the three presidents in question (Bush 43, Nixon, and Eisenhower) produced reasonable income growth, which is a better predictor of presidential election outcomes than unemployment. Consider this modified plot from Douglas Hibbs, whose Bread and Peace model employs a weighted measure of real disposable personal income growth -- the presidents in question are highlighted in green:

Eisenhower, Nixon, and Bush 43 all presided over at least moderate income growth during their first four years in office; Obama so far has not. (The same applies for GDP growth, another frequently used variable in forecasting models.) Unless the state of the economy improves, it's not likely to matter who he models his 2012 campaign after.

[Cross-posted to HuffPost Pollster]

Comments

[David in Cal]

IMHO Obama's policies are directly responsible for the slow economic growth. A recent interview with the founder of Home Depot includes three important assertions

1. Excessive regulations are harming job creation
2. Even though taxes are low now, the budget deficit shows businessmen that tax increases are coming.
3. Businessmen fear that the federal government may use agencies like the SEC and the IRS to punish them.

It's not surprising that a political opponent of the President would criticize him this way. However, a few days ago, Democrat Steve Wynn, a man who played a major role in revitalizing Las Vegas, made much the same observations:

[Wynn's] customers and the companies he works with “are frightened of this administration,” he said, “and it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America.”

“Until we change the tempo and the conversation from Washington, it’s not going to change,” added Wynn, according to a transcript of the call’s question-and-answer session. “And those of us who have business opportunities and the capital to do it are going to sit in fear of the president. And a lot of people don’t want to say that. They’ll say, ‘God, don’t be attacking Obama.’ Well, this is Obama’s deal, and it’s Obama that’s responsible for this fear in America.”

[Nadia]

Really? This survey by a conservative group of economic forecasters said demand was more important than uncertainty or fear.

http://online.wsj.com/article/SB10001424052702303661904576452181063763332.html

Moreover, this survey of small business owners found that poor sales have soared as the reason why they're not selling.

http://krugman.blogs.nytimes.com/2010/09/15/its-demand-stupid/

[MartyB]

Neither anecdotal evidence nor surveys prove much of anything regarding why the slow economic growth/ unemployment

That said, I found the following graph somewhat stunning in mapping the correlation of Obamacare and employment growth slow-down.

http://www.nationalreview.com/blogs/print/272342

As the author notes, correlation does not prove causation, but this is one of the some of the most startling data I've seen recently.

BTW @Nadia, I would note that "demand" includes "business to business" demand - i.e. business aren't buying thus other businesses aren't selling to them. In addition, consumers not buying could be because they are saving or paying down debt due to - ta-da - uncertainty at their jobs and businesses.

It's becomes a vicious circle. Krugman, being a Nobel Prize winning economist (and former Enron Advisor) knows this as well. Funny he doesn't square the circle.

MartyB

[David in Cal]

Nadia, the free portion of your cited WSJ article says the WSJ surveyed "53 economists," but says nothing about the surveyed economists being conservative. Does the hidden part of the article identify the surveyed economists as "conservative"?