Economy no savior for Dems
By Peter Schroeder and Vicki Needham - 09/01/14 12:13 PM EDT
Democrats are running out of time for an economic savior.
They have long predicted that an economic turnaround would be the elixir that helps them retain control of the Senate in November.
But with just a handful of big economic reports left before Election Day, the economic picture is largely in place. And while the outlook is bright, voters continue to hold a dim view of their own financial prospects.
“There are still a lot of families playing catch-up,” said Jared Bernstein at the Center for Budget and Policy Priorities. “It’s got to be awfully hard for the typical voter to figure out what Congress had done to help the economy move forward. It’s a lot easier to figure out what they’ve done to screw things up.”
Broadly speaking, the economy has made gains in the last several months. The unemployment rate has held steady or dropped every month for over a year, and new data shows the economy grew this spring at its fastest rate in more than 12 months.
But the good news isn’t resonating with the public.
A Wall Street Journal/NBC News poll released earlier this month found 71 percent of people blamed Washington for the economy’s woes, and dissatisfaction mainly fell on incumbents overall, rather than on a particular party.
That poll found roughly half of voters believe the economy is still in a recession, even though the economic decline ended in June 2009.
Similarly, Gallup’s index of economic confidence has remained unchanged for all of 2014. People are actually less confident about the economy now than they were in January, when the unemployment rate was nearly half a percentage point higher.
With just two months to go before the midterm elections, there are just a handful of major economic indicators due before ballots are cast, including a pair of jobs reports.
With so little time left, it appears increasingly unlikely that views will change enough to boost the chances of Democrats, who are trying to escape the gravity of President Obama’s flagging poll numbers.
Some researchers argue the economic recovery has not been felt widely, with the majority of the gains going to people on the top of the income scale.
For example, the University of Michigan reported Friday that while consumers overall were more optimistic about their finances, the vast majority of that boost came from those in the top-third of income earners.
Fifty-nine percent in that top group said they felt better off, compared with just 34 percent of the bottom two-thirds who felt the same. Thirty-four percent of the top third reported net gains in income, while wages remained flat for everyone else.
“While the economy is clearly improving, the benefits of that growth have only recently begun to reach middle class people,” said Bernstein, a former economic adviser for Vice President Biden. “People don’t pay their rent or buy their food with GDP. It’s got to reach their paychecks.”
On Wednesday, the left-leaning Economic Policy Institute reported that in the past year, wages have actually fallen for everyone but the very poorest when taking inflation into consideration. That study found that wages were stagnant or falling at nearly every income and education level. No matter how good the overall economy might be doing, voters notice the size of their paychecks most of all, experts say.
“I don’t think voters will feel good about the economy until real wage growth begins to rise,” said Mark Zandi, chief economist with Moody’s Analytics. “Since most people have jobs, they judge the health of the economy based on whether they are getting a raise that covers the increase in the cost of living.”
Democrats have tried to harness dissatisfaction over wages with a populist campaign message focused on economic inequality, raising the minimum wage and requiring equal pay for women.
While the NBC/WSJ poll found that women in particular were in favor of a Democrat-led Congress, it remains to be seen whether the populist proposals can overcome the broader concerns over the economy.
Many Democratic candidates are stressing on the campaign trail that the economy still has plenty of room for improvement.
Benton Strong, associate director of communications for the Center for American Progress Action Fund, said many Democrats are “running on the reality that a lot of Americans aren't benefitting from the recovery yet.”
“The contrast in many of these races is about who recognizes there is still far to go and supports things like raising the minimum wage or healthcare, which is absolutely an economic issue,” he said.
“Obviously more good jobs numbers show we're moving in the right direction, but good candidates are talking about the work we still have to do.”
It could be a while before voters universally feel like the economy is back on track. But a broader recovery could gain steam by 2016, potentially changing the dynamic of the presidential race.
“If current trends remain in place, the job market will be tight enough by this time next year for wage growth to pick-up,” Zandi said. “It will be strong enough two years from now to positively change peoples’ perception of the economy, just in time for the presidential election.”
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