Politics Obama’s Puzzle: Economy Rarely Better, Approval Rarely Worse By JACKIE CALMESJAN. 27, 2014 WASHINGTON — President Obama will pronounce on the state of the union for the fifth time on Tuesday, and never during his time in office has the state of the economy been better — yet rarely has he gotten such low marks from the public for his handling of it. Not only have economic indicators shown progress toward pre-recession health, but many forecasters are predicting what one called “a breakout year” for growth. A new study from a Federal Reserve economist even put a more benign spin on a negative trend, the shrinking labor force, by attributing the decline not to discouraged unemployed workers who have quit looking for jobs, but to the first baby-boomer retirements. Demand for labor is up and the unemployment rate is below 7 percent for the first time since November 2008. Consumers, buoyed by rising home prices and stock values, are spending more; so are businesses. Exports are growing as Europe regains health. The fiscal drag from state and federal spending cuts has abated. And contrary to Republicans’ claims, many forecasters do not see the health care law as “a job-killer.” Economically speaking, said Scott A. Anderson, chief economist at Bank of the West, “the state of the union is the best we have seen in years.” Mr. Obama and his speechwriter could not phrase it better, or simpler. Yet taking credit is complicated, given the clear evidence in national polls that most Americans are not in a mood to give him any. Mr. Obama’s ratings for his handling of the economy, never high since his first months in office, slipped throughout 2013 in national polls. As he began this year, nearly six in 10 Americans disapproved, nearly matching his lowest marks in 2011, a year of repeated and damaging fiscal fights with the new Republican House majority. Advisers said the decline was a reflection of Mr. Obama’s diminished standing more broadly after months of public attention to issues that have dominated news coverage: the administration’s bungled introduction of the website for the insurance marketplaces created by his signature Affordable Care Act, and the controversy over intelligence gathering by the National Security Agency. “For the average person sitting at home watching news on TV and the Internet, they have seen their president spend the last six months or so dealing with N.S.A., a government shutdown and a malfunctioning website,” said Mr. Obama’s chief strategist, Dan Pfeiffer. Another problem, Democrats say, is that despite the overall economic comeback, many Americans have not seen much improvement for themselves or their family members. “There is an underlying reality that most Americans feel they are not benefiting from the recovery and still feel hard pressed in terms of their ability to keep up with the cost of living, save for their future or find a better job,” said Geoff Garin, a pollster and strategist who advises Democratic senators. There is, he added, “a strong feeling in the country that the economic deck is badly stacked in favor of those at the top, at the expense of average person. People don’t necessarily blame President Obama for that, but their frustration certainly affects their feelings about his handling of the economy.” One of the president’s biggest challenges this year is to change that. Voters’ perception of Mr. Obama’s stewardship will form the backdrop for congressional elections in November that could cost Democrats their Senate majority and leave Mr. Obama with a Republican-controlled Congress for the remainder of his term. Though presidents are not on the ballot, midterm elections are traditionally a referendum on their performance, often to the detriment of their party. And while Republicans’ own poll ratings are more dismal than either Mr. Obama’s or his party’s, Democrats are running scared. Despite Republicans’ generally worse image problems, the same nonpartisan polls show that on the question of which party is better able to deal with the economy, Republicans have recouped the public favor that they lost in the Bush years. The frustration for Democrats is that many economists and business forecasters fault Republicans in Congress for retarding the recovery since 2010 by forcing Democrats to accept deep spending cuts, by opposing spending for job-creating infrastructure projects that Mr. Obama has proposed and, especially, by threatening a default with the party’s resistance to increasing the nation’s statutory borrowing limit. “I regard the spending cuts of the last several years as just mad,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “It delayed what would otherwise have been a quicker recovery.” The shift away from austerity, as reflected in Republicans’ agreement last month to a budget deal that undid some of the across-the-board spending reductions known as sequestration, “is going to be hugely helpful,” he said. Other forecasters were also encouraged by that bipartisan budget deal. In recent analyses for business clients, a number of forecasters concluded that Republican leaders had reasserted control over Tea Party members since the federal government shutdown last fall, which was politically disastrous for the party. But a test looms next month, when Treasury Secretary Jacob J. Lew has said that Congress must raise the debt limit again. “If we don’t get another political crisis this year, the way is clear for the small-business sector to recover properly,” Mr. Shepherdson said. “If that happens, everything changes. The small businesses have spent the last five years not spending any money. Their equipment is old, it’s aging and it needs to be replaced.” He said such capital spending would in turn “generate high-paying, quality jobs — not the sort of low-paying service-sector jobs we’ve been seeing — and that feeds back into stronger consumer spending, sustainable spending.” As Mr. Obama is certain to point out in his address, lest he be seen as clueless, the economic news is not uniformly good. Real wage growth has been stagnant or declining for many Americans, exacerbating a decades-long trend of worsening income inequality between the rich and everyone else, and threatening future growth. The number of long-term unemployed is also greater than in past economic downturns. Even so, Mr. Anderson of Bank of the West said: “For the first time in this economic expansion, the economy appears to be firing on all cylinders. We are forecasting the strongest year for U.S. G.D.P. growth since 2005. It has the potential to be a breakout year. The key is the U.S. consumer, who finally appears more willing and able to spend.” A version of this article appears in print on January 28, 2014, on page A12 of the New York edition with the headline: Obama’s Puzzle: Economy Rarely Better, Approval Rarely Worse. Order Reprints|Todays Paper|Subscribe
Posted on: Tue, 28 Jan 2014 04:02:31 +0000
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