Yeppers, you read that correctly! While the nattering nabobs of negativity in the corpora-media have been focused only on unemployment, they’re missing the forest for the trees. The fact is most people DO feel better about the economy because of a powerful combination of rising asset prices (e.g. via stocks, mutual funds in 401ks), lower household debt and rising home prices. Total household net worth, equal to assets minus liabilities, reached $62.7 trillion in the second quarter of this year as compared to $50.4 trillion in the first quarter of 2009 just after Obama entered as No. 44.
That represents an increase in net worth of more than $12 trillion, not insignificant and a magnitude which most people are bound to feel. Worse for Willard Mitt and his minions, Mark Zandi – chief economist for Moody’s Analytics has predicted the third quarter will be even better. That would be the quarter ending in September. This is mainly thanks to strong gains in housing prices which has Zandi even forecasting we could hit a net worth peak of $67.4 trillion in the last quarter of the year.(NY Times Business, Sept. 29, page B2).
As Zandi and others point out, a healthy household balance sheet is a crucial measure of financial security which affects a majority of the populace and is at least as important as employment stats – if not moreso. Also, while up to 15-16% of Americans may be unemployed or under-employed and not even own stocks (or mutual funds, say in 401ks) a recent Gallup poll found that 54% of Americans did own stock, mutual funds and hence have been benefiting from the rising stock-mutual fund share prices. Hence, they are much better off than when Obama took office.
Numerically speaking, we can register this enhancement easily: From January, 2009 until just this past week the Standard and Poor’s 500 stock index had gained over 55%. For those who did keep their 401ks sustained in selected mutual funds, this indicates that would have made all their money back from the 2008 losses and added more. Meanwhile the NASDAQ composite levels have exceeded levels last seen in 2007.
All of which bodes very well for Obama and deflates the Mittster’s attacks on Obama’s management of the economy. Again, I repeat what I said before, that never has a president failed to be re-elected when the stock gains averaged at least 10% over each year of his first term. The S&P 500 index disclosed an even higher average. So, while the short sighted have focused on the unemployment stats and keep repeating that “never has a president been re-elected when the unemployment rate was over 7%” they forget we are in novel territory. Since the stock price gains neutralize the unemployment stats in terms of a re-election barometer.
Non-stock invested Americans still have most of their equity and net worth tied up in their homes, so that must also enter as a barometer. Here also, Mitt is in trouble if he hopes to hang a bad economy rap on the President.
While housing prices are still below their 2006 peak, most of the collapse transpired before Obama took office. Meanwhile, the Case-Shiller Index of 20 cities has this past week shown a steep 1.6% increase since August, with even the hardest hit low end market homes showing strong gains. Add to that the fact the luxury home market in cities such as New York, LA, San Francisco and Miami has fared even better and you have a really sunny outlook which portends even further gains next year. Provided the apple cart isn’t upset!
So why, given the extent to which the barometers have turned and small fortunes too, would Americans suddenly jump ship Obama onto Ship Romney? Especially when most sober economic observers have stated Romney’s plans would do no more to fix the deficit than Obama’s and indeed would make things much worse – given he plans to add nearly $6 trillion via larger tax cuts and higher military spending.
True, many of the “47%” still possess balance sheets under pressure, but they have to see the exterior signs that the economy is improving overall, even if not as much as they’d wish personally. Also, they’d have to know that a vote for Mitt Romney ending in a win for him, would see their economic security crumble even further as key protections are yanked away including: food stamps, Medicaid (including for seniors who need long term care), and Medicare (making seniors 65 and over pay 80% for all their cancer operations, treatments).
Some conservative sources (e.g. WSJ op-eds) have argued that working class votes for a guy like Mitt fall under the sway of “disposition” and take no account of “narrow economic interest” . My point is that a working class guy has NO “narrow economic interest” in this election but a major one. Thus, to choose Romney when the worker must know the stakes and the oncoming suffering he will endure, is like placing a .44 magnum in one’s mouth and pulling the trigger.
This is why I am convinced that even those whose balance sheets aren’t as flush as they’d like them to be, will still not vote for Romney. They will sit out the election first, or vote Obama.