In a Gallup poll conducted last week, 43% said the state of the economy is the most important issue to consider at the polls this year. It's safe to say they don't mean that in a good way.
People aren't happy with the economy, and they're going to show it tomorrow.
This isn't surprising. The economy's direction often dictates voters' decisions -- especially during times of extreme prosperity or extreme misery. Harvard financial historian Niall Ferguson explains this in his book The Cash Nexus:
It has become an axiom of modern politics that there is a causal relationship between economics and government popularity: to be precise, that the performance of the economy has a direct bearing on the electoral success of an incumbent government. A good illustration of this new economic determinism was the widespread explanation of the failure to impeach President Clinton for perjury and the obstruction of justice in connection with his numerous sexual misdemeanors. By February 1999 a majority of Americans believed Clinton was guilty of the charges against him, but only a small minority wanted him to resign as president. According to Senator Robert Byrd -- and many other commentators -- the explanation was simple: "No president will ever be removed ... when the economy is at record highs. People are voting with their wallets in answering polls."
Here's another way to look at it:
Source: Roper Center for Public Opinion Archives, Yahoo! Finance, author's calculations.
In contrast, Ferguson notes that in the year before Richard Nixon resigned in 1974 with approval ratings under 30%, "unemployment rose by almost 1 million and the inflation rate doubled ... on Wall Street the stock market fell by a third." It's hard to find forgiveness when you can't find a job.
Examples of governments losing popularity amid strengthening economies -- or vice versa -- surely exist. But they're rare. As the Financial Times wrote half a century ago, "All political history shows that the standing of a Government and its ability to hold the confidence of the electorate at a General Election depend on the success of its economic policy."
That's a little scary if you think about it. Correlation doesn't always mean causation. Are strong economies the result of good economic policies? Weak economies the result of poor ones? Sometimes that's obviously the case. Other times it's not as clear. The success of the 1990s economy was far more attributable to a stock bubble and the innovations of Microsoft
With that, here's a fitting quote from a recent Bloomberg article:
[The current government] cut taxes for middle-class Americans, expects to make a profit on the hundreds of billions of dollars spent to rescue Wall Street banks and has overseen an economy that has grown for the past five quarters.
Most voters don't believe it.
A Bloomberg National Poll conducted Oct. 24-26 finds that by a two-to-one margin, likely voters in the Nov. 2 midterm elections think taxes have gone up, the economy has shrunk, and the billions lent to banks as part of the Troubled Asset Relief Program won't be recovered.
Now go vote. Rationally, please.
