Economy, Demographics Work in Obama's Favor for 2012

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credit: Joshua Roberts/Reuters

Next year will mark my 40th working in politics.

I got my start working on a U.S. Senate race as a senior in high school, and later that year I moved to Washington to attend Georgetown and begin a stint on Capitol Hill. As I reflect on nearly four decades of watching politics from high and low perches, I can say that the way I look at national politics and political trends has greatly evolved.

It has become increasingly clear that one has to take a multidisciplinary view of politics, where you watch not just what happens in campaigns and elections but also consider how economic events and demographic trends affect the political atmosphere.

If you look at what is happening today, it's abundantly clear that such things as the economy and demographics play enormous roles in politics. White House strategists must be very encouraged by the latest unemployment report.

Released last Friday, it indicated a net increase of 192,000 jobs and an 8.9 percent unemployment rate, down from 9.8 percent in November. This kind of growth should be heartening to those who believe that the closer unemployment is to 8 percent rather than 9 percent, the greater President Obama's chances of being reelected.

The only really useful historical precedent for a jobless situation like the one we're in was during President Reagan's first term. The country was suffering from a 10.8 percent unemployment rate in November and December of 1982, two years before Reagan had to face the voters again.

By December 1983, unemployment had dropped to 8.3 percent and finally to 7.2 percent in November 1984, when he was reelected in a landslide, winning 49 states.

At its peak, Reagan's unemployment situation was worse than Obama's. But the economic resurgence that occurred after Reagan's first midterm election enabled him to win reelection by a historic margin. Nobody is talking about a 49-state win for Obama in 2012. But it would be plausible to assume that his chances at winning 270 electoral votes and with them reelection would be a lot better if unemployment were to drop within a point of where it was when Reagan scored a second term.

Exploding oil prices and the resulting pain at the gas pump, however, along with the rapidly rising cost of food and other commodities worldwide, have the potential to choke off this frustratingly sluggish recovery and the job growth that seems to finally be picking up.

The combination of civil war in Libya, political unrest throughout the oil-rich Middle East, and surging demand for oil in emerging and fast-growing economies, particularly China, is driving oil prices sky-high.

The price of Brent crude oil on Monday morning was $117 a barrel, up from about $75 a barrel in late August. One prominent economist told his Wall Street clients that morning that "If Brent goes to $130 and stays, we'll probably cut our GDP forecast from plus-3.5 percent to plus-2.5 percent. Gasoline futures last week surged plus-30 cents." High fuel costs are the equivalent of a huge tax increase, vacuuming money out of consumers' pockets, only without the benefit of cutting deficits.

Presented by

Charlie Cook is editor and publisher of The Cook Political Report and a political analyst for National Journal.

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