Historically, nothing -- not campaign advertisements, social issues or even wars -- has influenced voters more heavily than the direction of the economy in an election year.
The final major economic turning point of President Barack Obama's first term seems to have arrived. The question is which way the U.S. economy will turn.
Job growth has picked up nicely in the past few months, raising the prospect that the American economy is finally in the early stages of a recovery that will gather strength over time.
But with gasoline prices rising, the government cutting workers and consumers still deeply in debt, some forecasters predict that economic growth -- and with it, job growth -- will slow in coming months.
Politically, the difference between the two situations is vast. In one, Mr. Obama will be able to campaign on a claim, as he has recently begun to do, that the country is back on track.
In another, he will be left to explain that recoveries from financial crises take years, and to argue that Republicans want to return to the Bush-era policies that created the crisis -- as he tried to argue, unsuccessfully, in the 2010 midterm election.
As a result, the economic numbers over the next couple of months, including an unemployment report April 6, will have bigger political implications than the typical batch of data. The Federal Reserve acknowledged the uncertainty in its scheduled statement Tuesday, suggesting that the economy had improved somewhat but still predicting only "moderate economic growth."
Economists say the economy's near-term direction depends relatively little on Mr. Obama's economic policies. The standoff over Iran's nuclear program, the European debt crisis and other events will most likely affect the economy more.
But many American voters are still likely to make their decisions on the basis of the economy. Historically, nothing -- not campaign advertisements, social issues or even wars -- has influenced voters more heavily than the direction of the economy in an election year.
"If you could know one thing and you had to predict which party was going to win the next presidential election," Lynn Vavreck, a political scientist at the University of California, Los Angeles, said, "you couldn't do better than knowing the change in economic growth."
Particularly important, Ms. Vavreck said, are the first six months of an election year, when many voters form impressions that stick.
Ultimately, the 2012 election may be close enough that other issues, like immigration or Afghanistan, will play a major role. But the past two years make clear just how important the economy's direction will be to Mr. Obama's fortunes.
His approval ratings drifted down in early 2010, as job growth weakened and "recovery summer" -- a White House phrase that Mr. Obama's aides would now prefer to forget -- failed to materialize. His ratings rose as growth picked up in late 2010 only to fall again when job growth weakened in early 2011 as the Arab Spring pushed up energy prices and the standoff between the president and Congress over the debt limit damaged investor confidence.
The pattern has repeated itself in recent months. As economic growth picked up late last year and helped cause a surge in job growth, Mr. Obama's approval ratings rose to a level that suggested he would be the favorite this autumn.
Over the past three months, monthly job growth has averaged 245,000, a rate that has generally led the incumbent party to win re- election. In only three races since World War II -- in 1952 (when the popular Dwight D. Eisenhower was running), in 1968 (when the Vietnam War hobbled the Democrats) and in 1976 (when Watergate hobbled the Republicans) -- has the outcome been different from what the economy's direction would have suggested.
In recent weeks, though, economic growth has slowed and gasoline prices have risen. Mr. Obama's rating has slipped in some polls. In other surveys it has remained near 50 percent -- which is generally high enough to lead to re-election.
Either way, the big uncertainty is whether job growth slows substantially in coming months.
More bullish forecasters point out that Americans are starting to behave in ways that suggest they are finally leaving the financial crisis behind. The government reported Tuesday that retail sales had risen at a solid pace in February and the months leading up to it. Companies, which have historically high profit margins, are adding workers at the fastest pace in more than five years, as many begin to make up for deep cuts during the recession.
And gasoline prices, for all of their psychological effects, do not have a major effect on many families' budgets. In January, gasoline accounted for only 3.6 percent of total consumer spending.
Dean Maki, the chief U.S. economist at Barclays Capital, argues that the economy's strengths are more than enough to continue reducing the jobless rate. With many baby boomers hitting their retirement age, Mr. Maki noted, the economy does not need to add as many jobs as in the past to keep up with normal labor-force growth.
Other forecasters argue, however, that job growth has probably hit its high-water mark for 2012. The U.S. government is cutting workers, and state and local employment is roughly flat. The dollar has risen, cutting into export growth. Households remain deeply indebted, which will restrain spending.
"I'm inclined to the more bearish camp," said Nigel Gault, chief U.S. economist at IHS Global Insight. For the rest of the year, Mr. Gault's firm forecasts monthly job growth of about 175,000.
One significant factor may be weather. The warm winter has allowed households to spend less on heating, while also causing people to travel more and go to the mall more. That economic lift will soon disappear.
If a solid recovery has finally taken hold and job growth remains above 200,000 a month, many polling analysts and political scientists view Mr. Obama as a favorite. If oil prices rise much further, or something else causes job growth to fall close to 100,000, he becomes the underdog.
In the middle -- if job growth slows a bit, to something like 175,000 a month -- the 2012 election has the makings of one of the closer races in recent history.
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