Misery Loves Company: Incumbents, Inflation and Unemployment

I want to follow my last post regarding unemployment and reelection by discussing a few other economic measures that are often referenced as useful indicators regarding a president’s reelection chances.  One of the most frequently cited is the “misery index”, which is simply a combination of the unemployment and inflation rates.  Anna Esten has put together some more charts documenting the relationship between the misery index and the electoral fortunes of incumbent presidents dating back to Truman in 1948.  The following chart shows the misery index for each incumbent president in the October before the presidential election.  Red indicates the incumbent lost his bid for reelection.

Not surprisingly, incumbents (Ford, Carter and Bush I) lost in three of the four highest misery index years.   The exception is Reagan in 1984, but the explanation for his win becomes clear when you look at the index level four years previous, when he beat Carter.  Carter lost when the October misery index was a horrendous 20.27, the highest any post-World War II incumbent faced in the month before election.  In the intervening four years, however, it came down nearly 9 points, and voters rewarded Reagan for that drop.

Reagan excepted, it appears that incumbents are in dangerous waters when the October misery index is hovering near double figures in an election year.  Where does this put Obama?  As of this past May, the misery index, driven mostly by high unemployment,   was at 12.7 – clearly dangerous territory.  But, of course, we are a long way from October, 2012.  Moreover, one might be tempted to argue, citing the Reagan exception, that the trend in the index come next October is more important than the actual number.  However, the historical record does not necessarily support this. As the following chart shows, the misery index was going down in the third quarter leading up to the elections in 1980 and 1992, but not enough to prevent Carter and George H. W. Bush from losing their reelection bids. Truman’s experience in 1948 suggests that presidents need to see a significant drop in the index to benefit.  If you start in double figures, and only begin to come down as the election draws nigh, it may be too little too late.

Of course, inflation has not been a major concern during Obama’s presidency – as yet.  So we might think that it is the trend in the unemployment rate that will be most crucial come November 2012.  But again, history does not provide Obama much solace, as this chart showing third quarter changes in unemployment rates (actually, it’s the change from July’s rate to October’s) indicates.

As we can see, a drop in unemployment was not enough to save Carter, Bush I or Ford.  To be sure, Carter and Ford were combating “stagflation” – high  unemployment and inflation.  Jobs alone couldn’t save them.  Truman, on the other hand, presumably survived the jump in the jobless rate in 1948 because it was combined with a steep drop in prices, which sent the overall misery index down. But Bush lost mainly because of concerns about jobs, even though the job picture was actually improving.  It was Clinton, however, who benefited.

The more general conclusion is that perceptions about the economy seem to lag reality.  That means the window of opportunity for changing voters’ attitudes regarding Obama and the unemployment rate may be shorter than we think.

Before we write off Obama’s reelection chances, however, the obvious caveats remain:  First, it’s July 2011 – not July 2012.  Second, we are projecting results based on 10 data points whose historical relevance can be debated.  I hope I made clear in the last post the great uncertainty surrounding any effort to extrapolate from such a small data set.  On the other hand, we shouldn’t blind ourselves to the political reality of running for reelection when unemployment is among historically high post-war levels.  Simply put, the economic fundamentals mean Obama is facing a difficult reelection challenge no matter which of the current Republican candidates he faces.

I’ve focused on very basic economic indicators here.  Nonetheless,  they do provide a good shorthand assessment of the fundamentals that drive elections.  If I get the chance, however, I’ll present some additional economic indicators focusing on disposable income, and some more sophisticated analyses that have proved very useful in predicting past election outcomes.




  1. Prof. Dickinson I think all of your projections neglect two important points. The first is the quality of the President’s potential competition. It seems weak to date although I will concede it is difficult to assess the strengths of his challengers at this stage. That said, elections are not necessarily votes up or down for the President but for him or his opponents. The second point is that it is, as you mention, too early to determine on which of the fundamentals the election will turn. If you would have predicted in July 2007 that President Obama would win the 2008 election based largely on the economy you would have had some unnatural clairvoyance. That is all.

  2. Addi – You are correct that it is too early to be making realistic projections based on current economic data although I am more confident than you, I think, that the 2012 election will turn primarily on assessments of the economy. It is possible, of course, that something like a terrorist strike might alter that, but otherwise I think Obama’s perceived stewardship of the economy will be the central issue. I also don’t want to totally dismiss the relevance of Obama’s opponent. But presuming they pass the smell test as a legitimate candidate, their campaign strategy will essentially be to focus on Obama and the economy. I would also caution against dismissing the current Republican field as a bunch of intellectual lightweights, ideologues and unknowns. Once the field narrows and the nominating process begins, the candidates who survive the initial scrutiny will be perceived as strong contenders. In short, I think the voting calculus will turn primarily on assessments of Obama, and only then turn to the qualifications of his opponent.

  3. I suppose you are right, to an extent. But at this stage, the Republicans hardly like their own candidates. At the same time, you might say the same about many liberals who feel betrayed by the President. I am not sure, however, that despite the tough talk, the Rachel Maddows of the world would ever NOT vote for a person like President Obama.

  4. Professor, have you seen any insightful studies on the relative attractiveness of the leading Republican candidates to independent voters (with historical extrapolations)? I would imagine the 2012 election will be largely determined, as in previous elections, by the sizeable independent bloc which tends to be more moderate, as well as the voter turnout from registered party voters. In such a polarized environment, I can’t envision too many registered voters switching sides.

  5. Addi – Again, we are in basic agreement. After all their hand wringing and complaining, Obama’s base is not going to vote Republican. Some of them may choose not to vote, but lacking a primary opponent, there’s no doubt that he will retain the bulk of his base in 2012. That’s one reason why he has moved so far right in the debt negotiations, essentially acceding to almost all the Republicans’ requests. He’s much more worried about losing independents than he is angering his base (again!).

    We shall see, in the end, just how much enthusiasm Republicans will muster for their eventual nominee…

  6. Travis Jacobs writes:

    “Hi Matt,

    I’m out of town and catching up on email–I don’t minimize economic indicators in the 1976, 1980, and 1992 elections, but the historian in me wants to make a few, if not thought out, comments. Carter, in spite of Playboy, had an awful lot going for him with Watergate and Ford’s inability to escape the Nixon pardon. In 1980 in some ways it is amazing Carter hung in there as long as he did, considering the hostages and his ineptitude, besides the horrible economy. And in 1992, while the Bush people badly misjudged when the economy would pick up, Perot badly distracted the Bush effort, even if he did not cost Bush the election. Again, no effort to downplay the economic issues.

    And you are working harder this summer to get things done than the people you write about in Washington!


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