The State of the Economy...and the Presidential Election

Michigan. Political lore has it that people vote their wallets; in large part, they choose a leadership team based on their immediate sense of economic well-being and confidence about the future. Peace and prosperity tend to favor an incumbent, while a distressed economy can spell trouble for a candidate's reelection bid. What follows are snapshots of the economic conditions in the 10 states with the most votes in the Electoral College, which elects the president and vice president.

Like the rest of the Midwest, Michigan spent the 1980s diversifying away from manufacturing. So the Big Three automakers don't carry quite the economic punch they used to. But for the state to thrive, the auto industry has to do well.

And the picture is improving, sort of.

"I don't think anyone's predicting fantastic improvement in the auto industry," says Joan Crary, an economist with the University of Michigan at Ann Arbor.

But car production through June was up 12.6 percent over the same period a year ago; light trucks have done even better. Michigan, alone of the three key Midwestern states, is expected to post a small increase in jobs this year - 0.4 percent, according to the WEFA Group, a Pennsylvania forecasting firm.

The problem is next year. The Big Three are shedding more workers, even though they're selling more cars. General Motors will cut 50,000 workers starting next year. WEFA Group predicts the state will slightly underperform the nation's job growth next year - 1.7 percent compared with 1.8 percent.

The economy hangs like a sword of Damocles over the incumbent president, Mr. Littmann says. The state's economic progress will help. "But there isn't much time between now and the election."

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