Re-Election Hopes? "It's Obama's Economy, Stupid!"

While it is seeming common knoweldge that the state of the economy has a significant bearing on the outcome of the presidential election in the US, Barclays notes that in the case of an incumbent running, economic performance appears to be most important. The three presidents who failed in a re-election bid in the post-war period (Gerald Ford in 1976, Jimmy Carter in 1980 and George Bush, Sr. in 1992) did so against a backdrop of weak growth, high unemployment, and low consumer confidence. These same factors all pose significant headwinds to the current incumbent. To overcome them, history suggests that unemployment would need to keep trending down and consumer sentiment would need to strengthen prior to the vote in November.




As Barclays notes (providing a little more hope):

More broadly, the stage of the business cycle at election time could be as important as the state of the economy per se, particularly when it comes to the labor market. In particular, the course of the unemployment rate may be as influential as the level itself. How the labor market recovery plays out in the second half of the year may play a pivotal role in the upcoming election.

Source: Barclays