Obama Won the Election Thanks to the Very Thing We Thought Would Sink Him: The Economy

Exit polls showed that the election was a referendum on economic issues, and president won that referendum

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The single biggest misconception from the 2012 campaign season? It was the persistent idea that the economy would boost Mitt Romney's election chances.

The running question throughout summer into the fall was whether Obama could win "in spite of" the economy, "in spite of" the economy, "in spite of" the economy. Last night, we learned something. Obama didn't win in spite of the economy. He won because of the economy.

Exit polls showed that the election was a referendum on economic issues, and president won that referendum. Sixty percent of voters said the economy influenced their vote the most. That's almost as much as the next two issues -- health care and the deficit -- combined, times two. Half of voters blamed President George W. Bush more than Obama for the deep recession and sluggish recovery, Politico pointed out, and a plurality of voters said the economy was getting better.

In other words, enough voters bought the story the president has been selling for years: Parachuting into the worst recession in modern times, the White House did what they could to set a floor for the downturn and create the conditions for a steady march back to normalcy.

Unlike most political stories, this one is mostly true. Obama lost 800,000 jobs in his first month in office through no fault of his own. He passed an imperfect but useful stimulus that elevated total public spending at a time when the private sector was pulling back. He partially nationalized the auto industry while wisely avoiding calls to nationalize the biggest banks. The stress tests raised confidence in the financial system by telling investors they trusted the biggest banks' integrity enough to be transparent about their health. He successfully kept deficits high after the stimulus wound down with a payroll tax cut. Yes, he failed to find anything resembling common ground with the GOP in his last two years in office. But in that time, he's still presided over 1.7% annual GDP expansion while creating about 150,000 jobs per month.

That's not a great growth. It's hardly even satisfactory growth. But it's growth, nonetheless. And almost every election model and historical trend we have shows that personally popular presidents overseeing rising GDP and steady job creation are favored to win reelection.

So, what now? All signs point to accelerating growth in the next few months. Time is healing the wounds that Obama didn't. Households are borrowing more, which is a strong sign of confidence. More young people are leaving their parents' basements and moving into apartments. That's pushing up rents. Rising rental costs are guiding housing starts on multi-family homes. That should encourage some young couples to become first-time home buyers. If residential investment rises from the dead, it could add another percentage point to GDP growth.

If only Washington politics could learn a similar lesson in rejuvenation.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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