GDP grows at 4 percent pace. Good news for Democrats and Obama, right? (+video)
The 4 percent rise in GDP last quarter continues a string of modest but good economic news, yet the party in power doesn't seem to be getting much of the credit. That could be important this November.
Washington — The US economy gained fresh momentum in the second quarter, growing at a 4 percent annual rate.
The welcome pickup for Americans is also, politically, good news for Democrats in a midterm election with control of Congress at stake. As members of the party in control of the White House, they generally stand to take some credit or blame for what’s happening in the economy.
But political analysts say that any tailwinds that Democrats get from faster growth and falling unemployment may be very modest when Election Day rolls around.
The key reasons: The improving economy hasn’t necessarily translated strongly into people’s everyday lives, and because voters aren’t giving President Obama much credit for the economy.
Strong reports on the gross domestic product (GDP) are certainly are better for Democrats than weak ones, says political strategist Steven Hankin, president of Lincoln Park Strategies in Washington. But “the effects [on key congressional races] I think are going to be minimal.”
“People will probably view numbers like today with the GDP as happening in spite of Washington rather than because of Washington,” Mr. Hankin says.
The issue of economic perceptions is important because vital levers of power are up for grabs. Pollsters see Republicans having an opportunity to wrest control of the Senate from Democrats while retaining their hold on the House of Representatives.
The 4 percent growth rate for the economy in the April-to-June quarter was big turnaround after a surprising 2.1 percent decline registered during the first quarter – a bigger sag than could be explained wholly by severe winter weather.
The second-quarter revival was only the third time during Mr. Obama’s tenure that GDP growth has been 4 percent or higher during a quarter.
Unemployment has also been falling, with the jobless rate at 6.1 percent in June.
But the progress has been uneven, with many Americans still feeling burdened by high debts, uncertain job security, and wages that may not be keeping pace with inflation.
Only 19 percent of Americans in Pew Research Center polling say the economy is “excellent” or “good,” as opposed to “fair” or “poor.” That number has improved, but not dramatically, since Obama took office.
A late-2013 Pew poll, meanwhile, found that Americans generally don’t think Washington economic policies since the 2008 financial crisis have helped the poor, the middle class, or small business, although they say rich people and big corporations have benefited.
So, although the Obama administration can point to “52 straight months of job growth,” ongoing financial challenges make some voters disinclined to reward Obama’s party.
The president talked about the challenge at a recent fundraising event.
“Although the economy has done well in the aggregate, for the average person it feels as if incomes, wages just haven’t gone up; that people, no matter how hard they work, they feel stuck,” he said, adding that “a lot of our gains … have gone to the folks at the very top.”
Obama has favored efforts to boost low-income wages (such as by raising the minimum wage) while taxing the rich more.
But more Americans, according to the Pew polling, favor Republicans rather than Democrats on economic policy.
All this doesn’t mean Democrats are in a no-win hole for this fall’s elections. Various issues – not just the economy – will help determine key Senate races.
And it’s possible that, if a drumbeat of continued improvement echoes from economic reports during the next several months, Democratic candidates in close-fought races will gain an edge on that issue.
Consider that, in a monthly “financial security index” survey, done by the firm Bankrate.com, consumers have been reporting improved financial health during the past year.
So the overall economic mood appears to be at least starting to shift.
Still, although average consumers feel improvement today, they also have considerable lingering anxiety. Their debt worries have receded a bit, but “people have not made progress in terms of emergency savings,” Mr. McBride says, and many feel held back by stagnant pay.