"If the Bush campaign thinks that a million lost jobs, ballooning deficits, skyrocketing health costs and record energy prices are signs of a good economy, they're even more out of touch than when George Bush says that his policies are helping America turn the corner," Singer said in an e-mailed statement.
The two campaigns are competing to tell conflicting stories of the economy's rocky course since Bush took office, said Thomas E. Mann, a senior fellow at the Brookings Institution. And, he said, "the two sides will use events, statements, data, you name it, to make their case."
The White House has argued that Bush's tax cuts and other policies helped the economy weather a series of extraordinary shocks, including the bursting of the stock market bubble, the 2001 recession, the Sept. 11, 2001, terrorist attacks and the wars on terror at home and in Iraq. In this view, the president's policies made the recession less severe than it could have been otherwise and have fueled slow but steady growth in employment and overall economic activity.
The Fed's statement corroborates this view by implying the economy would be fine if not for the outside turmoil that has pushed oil prices to record highs in recent days.
That counters the Kerry campaign's argument that better policies would have made the economy even stronger by now and that oil is not the only reason the economy has skidded in recent months.
With job growth stalling and oil prices surging, the Bush campaign is "looking for any way to buttress their claim that we're turning the corner and are on the verge of a very strong recovery," Mann said.
In that context, he said, a Fed decision to leave rates unchanged might have scared financial markets by signaling doubts about the economy.
The Bush administration had similarly characterized the Fed's June rate increase as the appropriate response to an economy gaining steam.
That contrasts sharply with President George H.W. Bush's public jawboning of the Fed in June 1992, when he and other administration officials explicitly called on the Fed to cut rates to spur a stronger recovery from the 1990-91 recession.
"Usually the Fed is part of the campaign because it's being criticized for raising rates," said David M. Jones, president of DMJ Advisors, a Denver consulting firm, and the author of several books on the Fed.
Bush later blamed the Fed for his 1992 defeat, saying in a 1998 television interview, "I think that if interest rates had been lowered more dramatically that I would have been reelected president because the recovery that we were in would have been more visible."
President Jimmy Carter lost his reelection bid in 1980, a year in which the Fed, under then Chairman Paul Volcker, triggered a recession by driving interest rates sky-high to break the back of double-digit inflation.
Economy.com's Zandi said the Fed's statement might help the current president if it boosts the economy's health by encouraging businesses to keep investing and hiring.
But political analysts say it may already be too late because voters' perceptions of an improving economy often lag the actual improvements, as happened in 1992. Views of the economy tend to gel in the second quarter of a presidential election year, they said. If the economy's output of goods and services, measured as inflation-adjusted gross domestic product, grows at a 4 percent annual rate or better, that typically bodes well for the incumbent. Growth below 4 percent, on the other hand, tends to hurt the incumbent's chances.
This year, GDP grew at a 3 percent annual rate in the April through June period.
Now, "Americans are pretty down" on the economy, Mann said.
A Washington Post/ABC poll last week found that 41 percent of respondents said they trust Bush to "do a better job of handling the economy," compared with 52 percent for Kerry.
