Barack Obama wins: It’s the (recovering) economy, stupid. What seemed his greatest vulnerability became his salvation.
Beginning in September, the economy took a slight — but unmistakable — turn for the better. This buttressed Obama’s economic message: I inherited a disaster from President George W. Bush; our policies avoided another Great Depression; the economy is on the mend, albeit slowly; don’t mess it up by reverting to Bush’s policies under Mitt Romney. Similarly, the economy’s modest revival weakened Romney’s argument: Only new leadership can reinvigorate the listless recovery.
Politically, the most important evidence of economic improvement came from consumer confidence surveys, which — though historically low — began to rise rapidly. In early September, the Gallup Poll’s confidence index, which had been declining since June, jumped sharply; the latest reading for late October was the best of the year. The University of Michigan’s survey also improved dramatically in September and October. “Overall,” it reported, “consumers were more confident about economic prospects in October than any other time during the past five years.”
Other indicators also improved. In September, the unemployment rate dropped unexpectedly to 7.8 percent from 8.1 percent. (It had exceeded 8 percent for 43 straight months.) The depressed housing market showed signs of recovery. New home sales in September of 389,000 at an annual rate were 5.7 percent higher than in August and 27.1 percent higher than in September 2011. September housing starts were 15 percent above August’s and 34.8 percent higher than a year earlier.
The economic bounce seemed almost an act of divine intervention; a favorable jobs report on Friday would reinforce the effect.
So: The undecided favored Obama.
(Note that it’s possible that statistics are sending a false signal. This has happened before in this weak recovery. One bad omen: Businesses are less confident than consumers, and this could dampen hiring. In the quarter ending in September, the economy grew at a meager 2 percent annual rate. Though better than the previous quarter’s 1.3 percent, this isn’t strong enough to make a big dent in joblessness.)
Mitt Romney wins: Obama’s campaign to demonize him backfired. Instead of casting doubt on Romney, it made Obama seem less presidential and offended undecided voters. The conventional wisdom holds that Romney’s convincing victory in the first debate catapulted him into a lead over the president. Up to a point, polls corroborated the consensus. Before the Denver debate, Gallup’s seven-day tracking poll (which average each day’s result with the previous six days) had Obama and Romney running almost even among “likely” voters. A week later, Romney had opened a margin that has fluctuated between four and seven points. Although Gallup’s methodology is criticized for over-weighting Republicans, other polls also showed a big shift. A Pew poll from Sept. 12-16 had Obama ahead 51-43. A post-debate poll gave Romney a 49-45 lead.
What the conventional wisdom missed is that the debate tarnished Obama in a second way. Recall that Obama’s strategy for months had been to portray Romney as a greedy businessman who values profits over people, parks his wealth in foreign tax shelters and would use the presidency to enrich the already rich. If the image had stuck, the election would, in effect, have been over.
But when Romney’s debate performance confounded the stereotype — he didn’t appear to be the selfish monster of Obama campaign rhetoric — the contrast hurt the president’s reputation. Pew asks respondents to judge whether each candidate “is a strong leader.” Before the debate, Obama led 51-38; after, it was a dead heat at 44-44. Another question asked whether each candidate is “honest and truthful.” Before the debate, Obama led 48-34. After, the gap closed to 44-39. Though modest, the shifts mattered in a tight election.
So: The undecided moved to Romney.
(Note that despite the slippage, Obama retained an advantage over Romney on most personal qualities. In the latest Pew poll, 59 percent of respondents said that Obama “connects well with ordinary Americans,” while only 31 percent applied such a sense to Romney.)
Which theory wins? We’ll soon know.