The number that could decide the election

Washington Post|Wonkbook|Ezra Klein

If you ask political scientists what decides elections, they won't say the unemployment rate. It's actually hard to find a particularly tight relationship between the unemployment rate and election outcomes. Nor will they simply say the economy, as that's too broad to be of much use. They'll say the "change in real disposable income." Which makes sense. We talk about people voting their pocketbooks. Well, the change in real disposable income measures whether the average pocketbook has gotten lighter or heavier.


Maxine Thomas hangs laundry to dry in her mobile home that is without power. Maxine, her two daughters and three grandsons have been struggling she lost her job last fall and her electricity was shut off by the utility in June when she fell behind on her bill. Her daughter Stephanie works at a nearby fast food restaurant and brings home ice to keep food that is stored in a cooler from spoiling. (Michael S. Williamson - WASHINGTON POST) At least some members of the administration know that literature, and they must have felt a cold chill reading Robert Pear's summary of a new report by two Census researchers. "Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909," writes Pear. And if you add in the direct hit from the recession, incomes have dropped almost 10 percent. It's the worst blow to incomes in decades.

I've spent the last few months asking pretty much everyone I could think of whether it had to be this way. Whether, to borrow a framing device from Carmen Reinhart and Vincent Rogoff, this time could have been different. And the answer, as far as I can make it out, is, well, maybe. Probably. A bit different, certainly. But probably not that different. Probably not as different as we would like.

It's indisputable that many in the political class didn't fully understand the severity of the recession at the outset. “I don’t think it’s too much of an exaggeration to say that everything follows from missing the call on Reinhart-Rogoff, and I include myself in that category,” Peter Orszag told me. But getting that call right before the rest of the political system, and the economic data, was ready to affirm it, wouldn't necessarily have led to a radically different policy response.

It might have meant a longer stimulus with more focus on infrastructure, and perhaps kept the administration from overselling the stimulus and leaping at every opportunity to claim that a recovery was underway. Maybe there would have been more emphasis on efforts to manage the pain of the recession through programs subsidizing workplaces that cut hours rather than cutting jobs and through direct hiring ideas, like Christina Romer's proposal to add 100,000 new teacher's aides. But it's not clear that there were many gamechangers on the table.

The full article, which goes through many more possibilities, is here. For the administration's purposes, however, the counterfactuals don't do them much good. This time wasn't different. Median incomes have falled by almost 10 percent over the last three years, and today we are talking about a potential double-dip, not a speedy recovery.

Perhaps the forecasters are overestimating how bad the next year will be, just as they underestimated this recession back in 2007. The administration had better hope so. if there's one silver-lining in the data for them, it's that voters appear to respond most strongly to changes in income in the year before the election, not in the whole of the president's term. But that's only a silver lining if median incomes actually grow over this next year.