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At Long Last, Some Pre-Election Economic Wind At Democrats’ Backs?

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Democrats, for months, have been bracing for the worst in November as voter sentiment turned against them. Midterm elections usually are unkind toward the party who holds the White House, and this year a growing anti-incumbent sentiment only has seemed to exacerbate the Democrats' troubles.

Unemployment, and a slow economy, have driven voters to increasingly turn on President Obama and his fellow Democrats. That unemployment continued to rise and the economy continued to drag — even in the face of the massive $787 billion economic stimulus enacted by Obama and congressional Democrats — stirred deepening anxiety and worry on the part of many Americans who became more and more skeptical of the economic remedies Obama the Democrats were applying.

That angst, in turn, sometimes has spilled over into the anger that helped fuel tea party and other anti-government activists.

Of course, leading Democrats have, for the last year or so, trumpeted any bit of good economic news to come over the horizon. It's not clear, though, that average Americans were buying the financial happy-talk — until now.

New research from a leading consumers' group finds that the personal financial status of the American consumer is on the rise. If these latest results from the Consumer Reports Index continue to hold up, this could be the best news beleaguered Democrats could hope for in preventing another 1994 scenario in which Republicans come in to retake control of Congress.

Consumer Reports says that its Employment Index continues to push into positive territory, building on gains since April. Improvements in this index are key to building confidence, the publishers of the well-known magazine say.

The Employment Index stands at 50.6, up from 50.4 the prior month. In the past 30 days, 6.0 percent of Americans have started a new job, up from 5.0 percent in April, and up from 4.6 percent a year ago. The proportion of Americans who have lost their job in the past 30 days stands at 4.9 percent, the magazine says in a statement.

Americans faced fewer financial difficulties in May, according to Consumer Reports.

The Consumer Reports Trouble Tracker Index has improved significantly, falling to 53.0 from its spike in April of 63.5, though it remains higher than a year ago (48.5). The improvement in the Trouble Tracker Index was driven by declines in the inability to afford medical bills or medication, down 2.9 percentage points; experiencing negative changes to credit card terms like increased interest rate, penalty fees, etc., down 1.7 percentage points; missing payment on a major bill – not mortgage, down 3.8 percentage points; and losing or facing reduced healthcare coverage, down 1.4 percentage points.

Perhaps most tellingly, the Consumer Reports Stress Index stands at 59.6. The level of stress consumers feel they are under is down compared to prior months and the Consumer Reports Stress Index is now at 59.6 versus April (63.8) and one year ago (62.0).

The Consumer Reports Stress Index captures attitudes regarding the amount of stress consumers feel compared to a year ago. It asks whether they are feeling more stressed or less stressed. When the Stress Index is more than 50, consumers are feeling more stress and when it is below 50 they are feeling less stress compared to a year ago. The index can vary from 100 (Total Stress) to a low of 0 (No Stress).

These numbers, in and of themselves, won't change the dynamics heading into 2010 midterms, but if in coming months they become a trend then elected Democrats may find their own stress index reduced.

If more and more Americans feel more secure as 2010 progresses, anger toward Washington will subside, and Republicans will find it harder to motivate the numbers of voters they will require to pick up the large numbers of seats they will need to swing the House or Senate their way.

Democrats still likely will lose some seats in November — that's almost inevitable at this point. But if these Consumers Reports results continue, their horror of a 1994 re-run will remain the stuff of their nightmares, and of Republican fantasy.

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About Scott Nance

  • Glenn Contrarian

    Scott –

    Don’tcha realize it yet? The BC conservatives (and Ruvy) all can testify in absolute certainty that any economic good news is either (1) the calm before the storm, (2) errors in statistics or reporting, or (3) outright lies, whether from the media (which except for Faux News is ALL far-left) or from the Obama administration that is somehow manipulating everything to make himself look better.

    Oh, and they’ll all tell you how oppressive our massive tax burden is…never mind that USA Today reported yesterday that the average American household is paying a lower percentage of its income in taxes than at any time since Truman was in office. They’ll tell you that’s a lie, too.

  • Clavos

    John B. Judis, writing in The New Republic, makes a cogent case for why “Why we’re not out of trouble yet–not even close.”

  • Clavos

    In Newsweek, Robert Samuelson sounds his own cautionary warning.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    Excellent analysis by John N. Judis (#2).

    I would only add that the overcapacity in manufacturing was brought about by technological advancements, which in turn made it possible to rely on smaller and smaller labor pool.

    Also, by 1970, American firms started to experience viable competition from countries like Japan and Germany, which recovered from the ravages of World War II. This provided further impetus to cut the labor component of production and brought about the stagnation of wages in the US. In fact, the production operations either moved offshore and the cheap labor pool was imported to US.

    For a while, the US working class managed to maintain their pre-1970’s spending habits through secured and unsecured debt (credit cards), but now the well has run dry.

    So the unemployment in the US and the West, especially in manufacturing, is more or less chronic and systemic.

  • John Wilson

    #4-roger, is very insightful:

    “I would only add that the overcapacity in manufacturing was brought about by technological advancements, which in turn made it possible to rely on smaller and smaller labor pool.”

    This is a key element of the mistaken economic policies we have pursued for the past 30 years. We have increased the workweek by 15% and doubled the number of workers to support a family when we should have been doing the opposite.

    But it is against our mirage of puritan ethic that we should lighten the work burden of the flock.

  • http://takeitorleaveit.typepad.com/ roger nowosielski

    John,

    You’d appreciate Richard Wolff’s analysis of our economic situation as per the following video.

  • Cannonshop

    eventually, you reach a point where there isn’t anything left to lose, and taken in a vacuum, the bottoming might well look like a hopeful sign.

    also, nothing trends in nice, straight lines with an economy-during the worst of the trouble in ’07 and ’08 there were help-wanted signs all over the I-5 corridor-at a time when people were lining up in other parts of the country to get a job slinging fast-food.

    It can be postulated, then, that economies (and therefore dissent and anger) are actually highly local phenomena-things in Washington State have remained fairly stable, so there’s virtually NO chance of the GOP picking up seats in either the congressional, or senate races. On the other hand, this may not be true of other states.

    Thing you’re missing in your final analysis is this: People are now in the HABIT of being angry at the government, minute variations in how many more people are in economic trouble aren’t going to alter this in only a few months’ time. It seems to me that you’re also forgetting the sledgehammer effect the S&L bailout had on George Herbert Walker Bush’s chance of re-election-by 1992 the “Recession” was over, yet Clinton was able to run on “It’s the Economy, Stupid.” and win.

    there’s also the effect of dumping capital in-for a short period, yes, you can improve the cosmetic situation, but once the money’s absorbed into the system, it will re-adjust, and in the case of all these ‘stimulus’ packages, that readjustment is unlikely to provide long-term treatment (which is what happens when you max out your credit-eventually the bills come due, and if you didn’t work the extra hours, you end up short. Same thing on a national scale, the currency winds up being worth what it’s worth-which isn’t what it used to be worth before being dumped into the system.)

  • John Wilson

    True: “…there’s also the effect of dumping capital in-for a short period, yes, you can improve the cosmetic situation, but once the money’s absorbed into the system, it will re-adjust,…”

    Which is why it’s a bad idea to dump money into the capital end of the economy. The recipients don’t actually *hire* anyone, they just buy competitors (and cut joint payrolls) or buy capital equipment to layoff more people.

    Dump money into consumers. Or even into welfare (which keeps those people out of the distressed labor pool). Yes, we should pay people NOT to work!

  • Cannonshop

    8: Actually, John, it would be better NOT to dump money in at all, and just let the damn business cycle work. Hoover tried stimulus and it didn’t work, FDR needed a World War, the S&L bailouts didn’t save anyone in the midwest, and lo, behold…
    Most economic experts currently predict the bulk of the eight million or so jobs lost last year…aren’t coming back.

    Your idea of paying people to stay home would be fine-if the money was coming from someone who is NOT everyone who’s still got a job, say, if Uncle Sam could somehow tap the Kennedys or the Rockefellers or turns up to-morrow with a container-ship full of platinum or something. (or maybe a mystic gold farting unicorn…)

  • Glenn Contrarian

    C-shop –

    Actually, Herbert Hoover, though he did try different schemes along the way, did NOT try any significant stimulus until 1932 – three long years into the Depression (and even then the ‘stimulus’ left much to be desired). His Treasury Secretary – the name escapes me for the moment – staunchly believed as you do, that they needed to ‘let the business cycle work’.

    So for nearly three years after the Crash of 1929, they didn’t do much in the way of the stimulus…and the DAY before FDR took office five thousand banks failed.

    If you’ll check the stats for the time, you’ll see that by late 1933 the economy was making significant improvement from its nadir earlier that year. By 1936 we had nearly crawled our way out of the Depression…but then FDR listened to the Republicans who wanted to slash the programs that FDR had started…and we went back down into the second dip of the Depression. It wasn’t nearly as bad as the first part, but it was bad enough.

    And you mentioned that FDR ‘needed a World War’…and WWII did indeed bring us completely out of the Depression. That’s very much like what they were saying back in ’82 during the recession: “All we need is a good war!” Why is that? Because economically speaking, WWII was a vast economic STIMULUS package financed by the government in the form of bonds and loans. The bonds and loans are used to put people to work – which is PRECISELY what happened in WWII, and is what the current stimulus passed in March of last year did (albeit to a lesser extent).

    And lastly, on the 8M jobs – who’s really to blame? I lay the blame on the doorsteps of those who led the charge for “free trade”, deregulation and globalization…also known as “Reaganomics”. Clinton also bears some of the blame, too, because he not only did not reverse the trend of Reaganomics but at times supported it.

  • John Wilson

    “9 – Cannonshop
    … it would be better NOT to dump money in at all, and just let the damn business cycle work.”

    You NEED to dump money into a growing economy/population or you get severe deflation.

    What ‘business cycle’? What causes a business cycle? What parameters control a business cycle?

  • Zedd

    Scott,

    I believe that the losses that the Democrats will encounter have more so to do with whom they are than the issues with the economy. Part of the negative result of our media’s obsession with SEEMING unbiased is their poor assessment of the complete landscape. This is a pervasive problem which shows up in the coverage of every relevant topic (national or international).

    The issue for the Democrats is the Democrats. They are HORRIBLE at PR. They had everything handed over to them. The economic conditions were caused essentially by conservative ideology, during a Republican leadership. Why would the Dems even have to breathe a sigh of relief because the economy is improving??? Everything that the Reps have been drum beating about for the past thirty years has turned into mush (family values- because of their own perversions, deregulation- the current mess, deficit – they blew it up, welfare reform – Dems did it, drill baby drill- eh hem, etc.) but you couldn’t tell. The Dems are still on the defense?? Oddly the media doesn’t make note of that. They just go flying around at whatever made up hype happens to be in vogue for the week. They actually take cues as to what is the relevant issue from the spin doctors of the conservative party (currently the party of nothing or power for the sake of power) and they go roaming the planet addressing non topics, counting down to Bagdad instead of asking why we are going in the first place.

    The Dems should not have to take the hit for the economic conditions. Why is it that the American public doesn’t know that (aside from the fact that its common sense). The media is too scared because they don’t want to appear liberal, to state the obvious

  • Zedd

    Now if you were talking about the health care thingy, heck yea everyone was angry. Right now they are just worn out and are glad that the “debate” is over. BUT they are angry. Heck being forced to pay for insurance is not what anybody signed up.

    As for the Tea Partier’s reaction to Obama. Come on… they are just stunned that a negro is in their beloved White House. Their world view is shattered and they are crazed and frantic. Nothing new or different has happened in Washington in the Republican party has taken place. A none White is in the White House is all. Let’s not waist an opportunity to examine who we are as a nation by inventing dilemmas that don’t exist in order to keep from feeling icky. Its the RACE thing. Next… :o)

  • Ruvy

    Obama-mamas grasping at straws in the wind. That is how this article reads. Those who think that there is good news are entitled to that particular delusion. Far be it from me to grasp a delusion from a jenny-asses mouth. Those animals have a mean kick to them.

    If this delusion of economic progress actually sells, then Democrats may minimize their losses in the legislative elections in 2010 (assuming they are held). If not, the Democrats will lose seats. But since the Republicans are no better than the Democrats, it will not matter at all – and the American economy will still go all the way down the crapper in 2011.