This article is from the archive of our partner National Journal

Gas prices are at their lowest level since the worst of the recession in early 2009. The economy grew at an impressive 5 percent rate in the third quarter of 2014, the strongest performance in more than a decade. In December, consumer confidence hit the highest level that it's reached during the Obama administration. The Dow is at near record highs. And a rising number of voters in national polls are indicating they're growing more optimistic about the economic future of the country.

If these trends continue, it will have significant ramifications on the outlook of the 2016 elections. A growing economy would improve President Obama's approval rating, putting Hillary Clinton in stronger position for the presidential race. Within the Democratic Party, the populist forces railing against income inequality would have a tougher time getting traction if an economic boom actually raises the fortunes of the middle class. The conservative grassroots will still be a potent force, but prosperity tends to mute voter anger.

An improved economy would also change the political impact of hot-button policy debates. Senate Republicans are bringing up legislation to construct the Keystone XL pipeline this month, and should comfortably have enough votes to send a bill to the president's desk. It's a smart political move, on an issue where the president finds himself running against public opinion. But with energy prices at record lows and an improved jobs forecast, the potency of such an issue isn't as intense as it was before the midterms. Liberals might be emboldened to propose a gas tax, which has long been a political nonstarter. Anxiety over immigration often peaks during economic downturns, but subsides when jobs are more plentiful. And if the economy continues to grow, the administration would argue that its controversial lineup of regulations isn't harmful, undermining a major element of the GOP's argument. Meanwhile, Obama's second-term message has evolved from blaming congressional gridlock for the lack of economic growth to taking a victory lap for the suddenly improving economy.

It's no secret that a growing economy is greatly beneficial for the party in power. But if the most encouraging economic signs in years are lasting—and that's still a huge if—it would upend long-held assumptions about the state of our politics. It would be encouraging news for incumbents of both parties, who have spent the last decade witnessing a historic degree of volatility in the electorate. Consider: Four of the last five elections since 2006 have been clear wave elections, sweeping one party into power. The recent turbulence within the Republican Party is predominantly a function of an ideological disconnect between the party establishment and its grassroots. But it's no coincidence that the tea party emerged in the wake of an economic earthquake. Concerns over spending and fiscal restraint are driving the base, and these issues become more salient during a recession.

To be sure, it's far from certain that the next campaign will be conducted during an economic boom. The gap between macroeconomic growth and personal economic security is still significant, and is a fundamental challenge for policymakers even in flusher times. Wage increases aren't matching the level of economic growth. There's still plenty of economic volatility, with the Dow dropping more than 500 points in the first full week of 2015. Two years is a lifetime in politics, and even the top economic forecasters have struggled to accurately predict future outcomes.

The politician with the most at stake is Hillary Clinton, whose likely presidential candidacy is more dependent on factors out of her control than many past candidates. She's already well-defined to most of the public, and is facing the historic reality that few two-term presidents are able to elect a successor of their own party. (Only two such successors prevailed in the 20th century: William Howard Taft in 1908, and George H.W. Bush in 1988.) She'd get the biggest boost if Obama's approval rating hit 50 percent in his final year in office. Given the polarization in the country, that would only be possible with sustained economic growth.

The state of the economy will also play a major role in Clinton's still-uncertain campaign message. Will she adopt an agenda centered on income inequality, or promote the economic gains and credit Obama for them? It's also notable that Jeb Bush, in a statement announcing his leadership PAC Tuesday, sounded a populist note by saying it's been a good last eight years for "top earners" but not for most Americans. Betting on continued stagnation may be the safe political bet right now, but that rhetoric could become outdated.

The uncomfortable truth about politicians is that they have less influence over the economy than they like to claim—and that voters hold them accountable for. It's notable that after two years of gridlock, with little consequential legislation passed through Congress, we're seeing the first signs of a recovery. Equally as uncomfortable is that, before most candidates even announce their presidential plans, the seeds of the outcome may already be planted. The next election won't be held for another 22 months, but the economic trajectory over the next few will go a long way in determining which party holds the advantage in 2016.

This article is from the archive of our partner National Journal.

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