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Will "It's The Economy, Stupid" Be The Key In 2008?

James Pethokoukis at US News & World Report postulates that a potential economic downturn could portend a Democratic victory in 2008.

It's terrible luck for Republican candidates in 2008 that just as the Iraq war seems to be ever so slightly turning for the better, the economy seems to be taking a turn for the worse, thanks to the spreading mortgage credit crisis. The former might not be decisive enough to save the party in 2008, while the latter might be just damaging enough to do it in for sure.

...An economic downturn as the election approaches might make the Dem candidate a lock. Negative growth in the second quarter of 1960 hurt Richard Nixon, running as Ike's successor. Likewise, a full-fledged recession in the second and third quarters of 1980 spelled doom for Jimmy Carter's re-election bid. In both those instances, the other candidates, JFK and Ronald Reagan, respectively, were running dynamic, "Let's Get America Moving Again" kinds of campaigns.

Pethokoukis, to his credit, notes that global economic growth, lower gas prices, and strong consumer demand may very well counter stagnating (or falling) home values and lingering effects of credit tightening. Add to that continued record low unemployment, real income growth, and low to non-existent inflation and there's a very good case to be made that a downturn is not inevitable.

Also boding well for GOP frontrunner's Rudy Giuliani and Mitt Romney is that neither is associated with the administration or Congress. If there is a downturn, even a slight one, the case can be made that Congressional Democrats (including front-runners Hillary Clinton and Barack Obama) share in that responsibility with the Bush administration. The outsider GOP hopefuls won't have to carry the baggage of votes (or missed votes) on bills directly related to the economy.


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Comments (47)

Oh sure we went through 6 y... (Below threshold)
nogo war:

Oh sure we went through 6 years of an economy driven by shaky credit on all levels.....
But it will be The Continued Failure of the Iraq Occupation. Iraq was and is the most most important continued failure....and of course the Billions poured down that vortex of crap effects our economy...
I am waiting for any Republican candidate in my State to warn me about Tax and Spend Democrats...
At least Dems will tax before they spend..Republicans just spend...

Nogo war, the Iraq war has ... (Below threshold)

Nogo war, the Iraq war has had little effect on the economy. While the federal deficit spending is not good for economic growth, it is not historically high as a fraction of GDP.

That's just silly rhetoric.

Oh sure we went throu... (Below threshold)

Oh sure we went through 6 years of an economy driven by shaky credit on all levels.....

As usual nogo, your economic opinion is informed by a history that goes back how far....one month? Using your own argument, Clinton thrived in a dot com bubble, fraud at Enron, MCI, Qwest, Adelphia and so on.....

But I will regognize your accuracy on one point....Dems certainly do tax before they spend.

There you go again.<p... (Below threshold)
Robert the Original:

There you go again.

The libs are stuck on stupid going on and on about the deficit. It is as if there is a news blackout on all economic good news or something.

Hey, wait a minute, there is!

So, for those libs whose ignorance can be attributed to MSM, the deficit is down to about $ 150 billion against projections only a few years ago of $ 450 billion. It is now 1.5 % of GNP - and going down - historically low and well within our means.

This public service announcement brought to you by Wizbang in recognition of the deficiencies inherent to being a lib.

Is the unemployment ... (Below threshold)
civil behavior:

Is the unemployment rate as good as it seems? Well, it is if you have four years of college and possibly graduate school and are waiting tables. Your working aren't you? Or that you are a soldier recently home and can't find work. But with the PTSD it's pretty hard and you probably don't want to work so are not counted as unemployed. If the marginally attached(discouraged workers) were to be counted the unemployment rate would be double.

Real income growth for who? If you are in the top 10% you've had growth. If you are in the other 90% you are looking at minimal or no growth whatsoever.

Gas prices when we invaded Iraq in 2003 were around $1.75. They are now averaging around $2.75. In what way is that a drop in gas prices?

Inflation pressing the edges about to explode, a deficit approaching the stratosphere and a credit crisis tied to a devalued dollar and this guy Kevin finds some kind of wiggle room to portend that a downturn is not inevitable.

Send me some of whatever you're smokin or drinkin pal........it's some kind of new experience for sure.

HughSBut I wil... (Below threshold)


But I will recognize your accuracy on one point....Dems certainly do tax before they spend.

And more times than not both sides spend more than they taxed.

What happen to all those co... (Below threshold)

What happen to all those comments on how great the stock marketing is doing under Bush? Are we witnessing under one President two of the greatest stock market collapses of all time?

Last week all I read was how great the stocks are doing, how great the economy is going, how great the surge is going, and now look what is happening. The market is in the tank, people are loosing their homes and maybe as many as 500 people just got blown-up in Iraq.

Bravo Conservatives!

Civil Behavior, it was show... (Below threshold)

Civil Behavior, it was shown just over a week ago in this posting that your claims about the economy over the term of this administration really are not correct.

Barney, don't confuse the stock market with the economy, they are different things.

Gas... (Below threshold)

Gas prices when we invaded Iraq in 2003 were around $1.75. They are now averaging around $2.75. In what way is that a drop in gas prices?

Inflation pressing the edges about to explode, a deficit approaching the stratosphere and a credit crisis tied to a devalued dollar and this guy Kevin finds some kind of wiggle room to portend that a downturn is not inevitable.

civil behavior

Do you want lower gas prices? Petition your local U S Representative to open ALL of the Gulf of Mexico, ALL of the Western Shore of the United States and OPEN ALL of ANWAR for exploration. After that, petition said Representative to allow the construction of 200 new petroleum refineries in the United States. That is the path to a lower gasoline price. The major U S oil companies will pay for all of it. Not one dime of tax payer money required. But Congress will Tax the new production, which will lower that deficit that you refuse to acknowledge is already falling to record lows as a percentage of GDP.

As to inflation "pressing the edges about to explode", let me remind you that the last time inflation actually exploded we had the Littlest Ex President in office and inflation pushed 14% interest rates such as the prime rate were at 19.5%. The prime is at 8.25% and see infaltion data....http://inflationdata.com/Inflation/images/charts/Annual_Inflation/annual_inflation_chart.htm

So you really have no clue what you are talking about here, right?

And you claim the credit crisis is caused by a devalued dollar? Did Markos tell you that this morning? CB, the current events in the credit market can be blamed on the usual suspects....greedy investors and bankers that made lousy loans to people who couldn't or wouldn't repay. That is why the current problem resides in what is called the subprime market.

BarneyAre we... (Below threshold)


Are we witnessing under one President two of the greatest stock market collapses of all time?....careful, there is some tricky math in this.....


Fixing the inflation link.<... (Below threshold)
barneyGRUBBLE:... (Below threshold)


What happen to all those comments on how great the stock marketing is doing under Bush? Are we witnessing under one President two of the greatest stock market collapses of all time?

What was the first one BG, the drop after 9/11?

If so you're true colors are showing, Bush had a hand in the towers collapsing? Is that it BG?

Or are you just throwing any tripe up to get a reaction?

Or are you just to stupid to realize what your implication is.

I wasn't born when the firs... (Below threshold)

I wasn't born when the first one happened (1929) and barney obviously wasn't for the second (1987). Or if he was alive for the latter, he was paying attention the same way he does today.

and "civil" behavior goes f... (Below threshold)

and "civil" behavior goes for the personal attack...what a surprise move by the liberal - not!

Funny how this supposed 'downturn' started right around after the Dem's took control of the pursestrings...

So Repubs would get no cred... (Below threshold)

So Repubs would get no credit for the booming economy of the last years, but all credit for a recession, if one comes (the MSM is hoping).

Typical liberal slant. Just like that New Republic article.

Remember the Internet Bubbl... (Below threshold)

Remember the Internet Bubble burst under Clinton and continued to drag the economy down during Bush's first admin, then we got 9-11.

Really, Barney and Ass, the two things Dims. don't have credibility on are National Security and the Economy. If you actually knew how a free economy and markets worked, and bothered to know the current relevant facts--all of them--you'd be a bit more persuasive.

But only just a bit more.

I despise Clinton greatly, ... (Below threshold)

I despise Clinton greatly, but I did not then and do not now "blame" him for the collapse of the dot.com bubble. There was nothing that I wanted the Clinton administration to do different either at the time nor in hindsight ( although I think that the Federal Reserve did not handle Y2K well, but that's another discussion ).

Likewise, the Bush administration is not responsible for the subprime lending crisis. The push to make mortgages more accessible to less qualified borrowers is one that has had a general push in D.C. from a lot of constituencies but the bottom line is the lenders failed to control risk themselves.

SPQR Good point. Jus... (Below threshold)

Good point. Just make sure you remind the trolls around here.

Which troll Hugh? The one ... (Below threshold)

Which troll Hugh? The one who, after I wrote a comment about defamation law accused me of "defending my racist buddies" ? Or the one who suggested that it was immoral that the US didn't allow terrorists to attack US citizens? Or the one that suggested that both WTC attacks were the fault of a mayor who was not in office during the first, and who didn't control the airports from which the hijackers of the second flew?

I'm sure the economy will m... (Below threshold)
John S:

I'm sure the economy will muddle through this like it always does.

I'm more concerned about the Federal government's future unfunded liabilities (Social Security, federal pensions, Medicare, etc.) currently at some $54 trillion. That's a figure that exceeds the total income of every human being that has lived since the Earth cooled. So we're basically screwed.

The only way out will be to inflate the currency so that a loaf of bread costs $20 million. Only then the government will be able to afford the $1,200 month Social Security it owes you.

"and low to non-exist... (Below threshold)

"and low to non-existent inflation and there's a very good case to be made that a downturn is not inevitable"

Dream on, Kevin. Inflation is already raising its nasty head for the average American w/ double digit increases on most major food items.

And thanks to a Duke Energy takeover of the local utility, Tri-state consumers (KY,IN,OH) are paying nearly 25% more over last year's utility rates. Not likely to help either Rudy or Mutt Romney in OH.

Civil, sorry that your libe... (Below threshold)

Civil, sorry that your liberal arts degree does not qualify you or prepare you for a well paying job.

"Add to that continued r... (Below threshold)
rrita m:

"Add to that continued record low unemployment, real income growth, and low to non-existent inflation and there's a very good case to be made that a downturn is not inevitable."

Indeed, the state of inflation could be just a state of mind:

"Ideally, if inflation expectations are very stable, or "anchored," they won't vary with swinging oil prices, economic booms or busts, employment data or other changing aspects of a dynamic economy. Bernanke said expectations are better anchored than in the past, but not completely, because they still respond to economic news."

w/ double digit in... (Below threshold)
w/ double digit increases on most major food items.

Umm, and how much of those rising food prices have to do with the law of unintended consequences as a result of the federal government falling in love with corn based ethanol. mandating it's use then subsidizing it with our tax dollars?

And all of that a result of of stupid energy policy that absolutely won't open our own, known, efficient energy sources to be open for exploration and production.

Nope, let's go for the pie in the sky solution. Let's create a solution that doesn't exist, and since no one would manufacture at current market dynamics, let's pay them to do it so we'll seem ohhhh, sooooo smart 'cuz, y'know, we're Congresscritters and we can do that. Besides, the people in Iowa and Minne-so-cold and ADM will luvvvvv us. And we can stick to evil big oil at the same time. Oh, joy!


French Fry Read the ... (Below threshold)

French Fry
Read the thread before you comment here.

And thanks to a Duke Energy takeover of the local utility, Tri-state consumers (KY,IN,OH) are paying nearly 25% more over last year's utility rates.

Identify that local utility. Kentucky has among the lowest electricity rates in the nation.

Wuzzy,<... (Below threshold)
civil behavior:


I'll take a productive job that pays my bills and allows me time for the most important things in life over a guy who pretends he earns his keep by brokering other peoples money any day of the week. (Insurance, financials, real estate,etc)

Also the difference between you and me is I measure success as to how happy I am and your only goal is how much money you have.

And the only way you can make more is by living off of others productivity.

Too bad isn''t it.

civil behaivor,That'... (Below threshold)

civil behaivor,
That's some mighty strong projection you have going on.
I do not work in any of those industries, if that is what you're implying. Nor do I measure success by the salary I make. If I did, I would have remained a traveling consultant (which was fun when I was in my 20s, living in hotels and airports) and easily make double what I do today. I chose to live in one place with family and friends at hand, and "make do" with a modest salary.

Now, riddle me this, what do I do for a living?

I see that Civil Behavior s... (Below threshold)

I see that Civil Behavior still isn't.

HughS,FF is likely t... (Below threshold)

FF is likely talking about Cinergy's merger/takeover by Duke in 2005. That or the earlier take over of Union Light, Heat and Power Co.
The PSC (public service commision) of KY at the end of 2006, ruled on a rate case brought by Duke requesting rate increase. This was the first rate increase in 14 years. Duke requested a 24.1% increase. The PSC granted an 11.8% increase.
Now why did Duke present a rate case?
In 2001, the PSC encouraged Duke to acquire its own generation plants rather than buy power from the grid or affiliated companies (other arms of Duke).
In 2003 Duke was given approval to buy capacity from Cincinnati Gas and Electric. December of 2003, the PSC ordered Duke to file a rate case. This case would take effect on Jan 1, 2007.

Now, as to increases... and here's a source for anyone that want's to play along:
Comparing Apr 2007 to April 2006, the change for the average rate of a residential customer in:
KY = +2.74%
IN = -4.39%
OH = +1.87%

The national average was +3.19%.
Greatest increase goes to Delaware, with a 28.6% jump.
Decrease to Maine with a -5.82% drop.
Maine, BTW, still has a higher rate than KY (15.13 vs 7.67).
Speaking of which, national average cost of electricit, April 2007? 10.65. KY, IN and OH are all below that.
FYI, highest cost of electricity is Hawaii, followed by CT. Idaho is cheapest.

The biggest driver of these increases has been the price increase in natural gas. While petroleum went up 32% in 2005 over 2004, it only accounts for 3% of electricity generation. NG, on the other hand went up 26% in the same period, and that covers 18.7% of generation. Coal took a 12.56 increase, and that covers nearly 50% of generation.
Coal the industry expected and compensated for (revamping plants etc), but gas took many utilities by surprise.

The statistic always ignore... (Below threshold)

The statistic always ignored when Bush supporters talk about the good of the economy:

The increase in poverty, for the 6th time in 2006.

That would look more impres... (Below threshold)

That would look more impressive with a citation jim.

No, jim, the statistics ign... (Below threshold)

No, jim, the statistics ignored are the ones already posted earlier in the month. That the Bush administration had seen dramatic improvement in minority unemployment.

Increases in households in poverty are subject to confounding effects from increased divorce, and actual improvements in living std with single mothers living on their own - so don't really have direct economic significance.

So, SPQR - you aren't ignor... (Below threshold)

So, SPQR - you aren't ignoring the poverty statistics, you're just saying that they should be ignored?

No, jim, your lack of readi... (Below threshold)

No, jim, your lack of reading comprehension continues I see.

Still looking for that cita... (Below threshold)

Still looking for that citation, jim.

SCSIwuzzy Excellent ... (Below threshold)

Excellent comment. Thanks for the info.

Looks like i pay 5.44 cents per kwh in direct costs (before the taxes and non operating expenses).
Wonder what Duke charges?

Hugh,Ask, and ye sha... (Below threshold)

Ask, and ye shall receive.
Assuming you are in KY.
If you like in Duke's KY territory, and are a residential customer, you are on rate RS. Page 30. :)
Anyway, this works out to 4.50 a month plus $0.073238 per kWh used. Add on any riders and local munipal fees, and you have your bill.

Now, do you think I've given our friend any clue as to what I do for a living? ;)

SCSIwuzzy, and ruin a good ... (Below threshold)

SCSIwuzzy, and ruin a good fantasy life with facts? You'll never see one from Jim.

SCSIwuzzy I think I'... (Below threshold)

I think I've figured it out but as for the trolls the answer is no!

Just looked into it. Povert... (Below threshold)

Just looked into it. Poverty stats aren't in for 2006 yet, and for 2005 they appear to be stable with 2004. So, according to current figures I misspoke there.

What we have regarding poverty, more precisely, is 4 straight years of a drop in 2001-2004, and one year of a plateau in 2005. Which is interesting, when looked at our economic gains; they're not gaining for the poor.


Interesting, SPQR, to accus... (Below threshold)

Interesting, SPQR, to accuse me of poor reading comprehension.

You said this:

Increases in households in poverty...don't really have direct economic significance.

That to me, sounds like you're saying they should be ignored.

If you are not referring to all poverty statistics with this statement, why even make it?

If you are referring to all poverty stats with this statement, I think it's a pretty fair reading to say that you're saying they should be ignored. No?

jim,Good that you ma... (Below threshold)

Good that you manned up on make belive numbers.
Here's a better source than AP/MSNBC (no editorial content).
Raw numbers are always best. :)

No, jim, your reading compr... (Below threshold)

No, jim, your reading comprehension has not improved.

Your strawman construction project continues obviously.

Um, jim, why are you taking... (Below threshold)

Um, jim, why are you taking SPQR to task for not recognizing the validity of statistics that you've already been forced to acknowledge were pulled directly from your ass?
I take back my comment about you manning up.

Well, SCSIwuzzy, I had the ... (Below threshold)

Well, SCSIwuzzy, I had the poverty statistics wrong. I looked them up and got them right.

I'm taking SPQR to task because SPQR is saying the entire set of poverty statistics should be ignored - but at the same maintaining that my statement that conservatives are ignoring them, is a result of poor reading comprehension.

All SPQR has to do is explain what he said that I got wrong. How 'bout it?

No, Jim, you are now outrig... (Below threshold)

No, Jim, you are now outright and intentionally misrepresenting what I wrote. And not for the first time. Work on your comprehension of English and work on being an honest debater.

SPQR, please explain to me ... (Below threshold)

SPQR, please explain to me with your superior command of English how you were NOT saying the poverty stats should be ignored. ANd then please explain how this proves wrong my statement, that conservatives like to ignore poverty statistics when discussing the current economy.

Since I am so clearly and obviously wrong, that should be quite easy for you.

Otherwise, my argument stands.






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