Home prices in the USA are plummeting, food and energy costs are sky high and, for many families, disposable income is stagnant or falling. Economic forecasters say conditions are the worst they've seen in a USA presidential election year in nearly three decades.
That should spell big trouble for the party in control of the White House, and the Democrats should be waltzing to victory, history suggests. But so far it hasn't turned out that way, even though voters by a wide margin name the economy as the most important issue in the campaign. As the presidential contest enters its final months, public opinion polls show Sen. Barack Obama (D-Ill.) locked in a tight race with Sen. John McCain (R-Ariz.).
Economists who say economic conditions can be used to explain the outcome of almost every presidential election since at least the 1950s are perplexed. "Historically, the economy seems to matter. And given the state of the economy, it should be giving Obama an edge," said Chris Varvares, president of Macroeconomic Advisers, a St. Louis firm whose forecasting model found that Obama should trounce McCain by nearly 10 points in November. Indeed, certain economic factors are so negative that, according to Varvares's model, 2008 should be one of the few years the economy "rises to the level of being a deciding factor." But, he said, the polls "certainly show something different."