Does a Boost in Economic Confidence Spell Trouble for Romney?

Though Mitt Romney's campaign has tried to paint the Obama presidency as unsuccessful at creating jobs and ending the recession, the Democratic National Convention last week seems to have injected some hope back into the American economic outlook: The U.S. Gallup Economic Confidence Index surged to -18 for the week ending Sept. 9 -- an 11-point jump from the previous week, and near the highest point reached since Gallup Daily tracking began in January 2008.

The question now is whether that level of confidence can be
maintained. After all, actual economic barometers are more important than public opinion, notes Lynn Vavreck, a political science professor at UCLA and author of The Message Matters: The Economy and Presidential Campaigns (Princeton University Press, 2009).

"Historically speaking, one of the most important fundamental factors in predicting incumbent party reelection is the economy," she said. "But the relationship and the robustness of this isn't based on people's opinions -- it's whether the GDP has grown or declined in the last six months."

Despite sluggish job growth and a weak manufacturing outlook, there are signs the economy is on the rise. Foreclosure rates in 2011 dropped 34% compared with 2010, according to RealtyTrac, and personal bankruptcies also declined during that period.

And while the Gallup poll would suggest that the DNC has ginned up a sizable swing in public optimism, what it may reflect is a highly successful appeal to the party faithful. "More likely what [the DNC] did was tie people's party identifications," Vavrek said. The numbers bear that out: According to Gallup, Democrats' confidence for the week spanning the convention averaged +24, up 17 points from the prior week, and confidence was up 13 points among independents, but was virtually unchanged among Republicans.

Still, the relative buoyancy of the economy may be just enough to secure Obama the victory come November. History is on his side, Vavrek said: "The reality definitely matters, and in this particular case, reality is good enough. Incumbent presidents in growing economies, even in slow-going economies, are hard to beat."

Now it's up to Obama to seize the momentum. "There has clearly been a burst of many kinds of enthusiasm in the immediate wake of the DNC," said Bill Galston, a senior fellow at the Brookings Institution. "Everything depends on if this is like a flashbulb that goes off -- a burst of light that blinds you and then it gets back to normal -- or whether it has in an enduring sense changed Americans' perceptions of the economy."

The full picture remains to be seen. "The president is not just asking for patience," Galston said. "He's also suggesting that the next four years are going to be better than the last four years. And the Republicans are saying madness is doing the same thing and expecting a different result. The election rides on which one the people think is more plausible come election day."