The Onion’s post-election satirical headline four years ago was “Black Man Given Nation’s Worst Job.” And indeed, President Obama inherited many problems, chief among them a collapsing economy and two foreign wars. But now troops are out of Iraq and leaving Afghanistan soon. And there are many signs the economy is improving.
Housing prices are rising again nationwide. And whoever is elected, Moody’s Analytics predicts America will add 12 million jobs in the next four years, sending unemployment plummeting below 6 percent. IHS Global Insight expects nearly 10 million new jobs.
“There should be good momentum greeting the new Congress and the new president at the door in January,” says Jim Millstein, recently the Treasury Department’s chief restructuring officer.
There’s debate as to why the economy is improving, but there’s little question that whoever spends the next four years in the White House will take credit for any improvements. But political talk doesn’t reflect the economy’s dizzying complexity. Voters can have a tendency to overstate the ability of presidents to impact the economy.
“We give presidents way too much credit for determining how the economy fares,” says presidential historian and Rice University professor Douglas Brinkley. “There are some presidents that get lucky, that get to ride the wave of things.”
An example he and other historians and economists often cite is Bill Clinton, who defeated the elder President Bush by focusing on the economy. To this day, Bush supporters point to signs of an economic upswing late in President George H. W. Bush’s term. It was too little, too late to save his campaign, but evidence, they believe, that the 1990s boom associated with the Clinton administration had roots in the first Bush White House.
The various rosy predictions about the next presidential term share a key assumption that a deal will be struck to prevent the tax increases and spending cuts of the fiscal cliff. If politicians fail to reach an agreement, the bright four-year forecasts could yield to a dramatically dimmer reality.
“Clearly that would be a disastrous start to the term of the next president,” says Nigel Gault, chief U.S. economist at IHS Global Insight.
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