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Ability limited for presidents to ‘fix' economy
A new survey this week provided some good news for those concerned about the economy.
Consumer confidence — a key indicator of how Americans feel about the economy — is at a five-year high this month, according to a Thomson Reuters/University of Michigan study of data. It went from 78.3 in September to 82.6 in October, the highest since just before the start of the recession in 2007.
The reason that is good news is that our economy is heavily driven by consumer buying and confident consumers typically will buy more.
It adds to the pile of good economic news that has been coming out in recent weeks that some think could bolster chances of President Obama being re-elected. After all, if the economy is getting better, it must be due to the policies of the White House, right?
That would certainly seem to be true since the president's opponent, Mitt Romney, has been claiming the bad economy is the fault of the president. So one would suppose the opposite would also be true.
But the reality is more complicated, and I'm glad to see many Americans are apparently beginning to see that, at least according to a recent poll.
Bankrate.com did a survey in early October asking people if they thought their personal financial situation would improve if either President Obama or Mitt Romney were elected. About half said one or the other would help their finances — 29 percent for Obama and 20 percent for Romney.
Interestingly, the other half felt it made no difference who is president. That indicates to me that people understand that the economy to some extent has its own driving factors and that presidents can have limited impact on them.
Economists have said that for a long time, but politicians tend to like to claim they have more influence than they actually do — at least when the numbers are good or when they claim they can make the numbers better.
The same thing is true when it comes to gasoline prices, another critical concern of many Americans. When prices are high, people demand the government do something about it.
During the GOP primaries, Romney blamed Obama for the high gas prices and promised to lower the price dramatically if only he could be president. He talks about that less now that gas prices are starting to go down.
Again, economists will tell you the ability of any president to control gas prices is very limited.
Market forces are what primarily drive most of the economy and gas prices. People don't like to hear that because it means the ability to change conditions is limited.
Still, it is true. But it would be an over simplification to say presidents have no influence.
Among other things, they can establish policies which make it easier for the marketplace to function. They can influence new technologies that could influence the marketplace. They can use their office as a pulpit from which to preach positively about the nation and the economy so that the fears of the people are reduced and their confidence is restored that we will weather a bad economic storm.
Yet, in the same poll that indicated many people realize the influence of presidents is limited, 60 percent of respondents also said a key factor in their voting decision for president is their personal economic situation.
A contradiction? Perhaps not.
It has been demonstrated in past elections that it is far better for an incumbent president to have good economic news — or at least a trend toward it -—in an election.
A voter who feels good about the economy (and therefore probably their own personal situation) is unlikely to want to “change horses” even if the president can't totally take credit. Thus the importance of the consumer confidence number.
One other number that is important is coming at the end of the week. That is when unemployment statistics for the month will be reported. Both sides in the election will be anxiously awaiting that number.
Terry Ross is director of the Yuma Sun's News and Information Center. Email: email@example.com. Telephone: 539-6870.