No statistic better captures the traumatizing effect of the economic meltdown on America’s middle class than the one released by the Federal Reserve yesterday: Between 2007 and 2010, the median net worth of American families dropped by nearly $50,000, from $126,400 to $77,300 – a decline of 39 percent that brought the median figure all the way back to where it was in 1992.
The finding is based on data from more than a year ago (the Fed releases these reports every three years), but it shows the extent to which the failure of housing prices to recover after the burst of the bubble has punished the middle class, a key reason why the broader economic recovery has been so sluggish.
Jared Bernstein, the former White House economics adviser, told the New York Times that the details are “quite ugly,” which is certainly a fair description. The main benefit of the report is probably its potential to remind the media and policy-makers just how much of a hit Americans have taken these past few years. But it also could be useful in understanding where the presidential race currently stands.
Generally, polls show President Obama with an approval rating that approaches (but rarely crosses) 50 percent and with a small lead over Mitt Romney, his presumptive GOP foe. What’s interesting about this is that Obama’s political health seems to be stronger than it should be. For an upcoming book, political scientists John Sides and Lynn Vavreck used data stretching back 60 years to create a model that predicts presidential approval based on economic conditions. As of the end of 2011, Obama was racking up scores significantly better than the model suggested he should be.
Sides and Vavreck suggest that, among other things, Obama may be benefiting from the public’s lingering memory of George W. Bush’s presidency and, more specifically, the imploding economy he passed off to Obama in January 2009. The new Fed figures may support this idea, in that they illustrate how steep, and pervasive and enduring the decline in family income has been since the final year of Bush’s tenure. As frustrated as they surely are by the slow pace of recovery under Obama, there’s probably an appreciation among many Americans of just how deep the problem is – and the fact that it preceded Obama’s swearing-in.
Interestingly, a focus group commissioned by Wal-Mart and administered by a bipartisan team of pollsters in Nevada last week found this phenomenon at work. The focus group consisted of working- and middle-class “Wal-Mart moms” who said they were undecided on the Obama-Romney race. As Roll Call’s Shira Toeplitz reported:
The females in the focus groups were surprisingly risk averse — to the point it evoked thoughts of FDR’s 1944 re-election slogan “Don’t swap horses midstream.” More than one Richmond participant cited “maybe three years isn’t enough” to turn things around. Another participant warned of a “learning period” if former Massachusetts Gov. Mitt Romney (R) is elected. And a Las Vegas mom argued of Obama, “He’s already in place.” On the other hand, hardly a hand was raised when the Las Vegas women were questioned if they were better off economically than they were three years ago. These voters were generally disappointed in Obama, but they weren’t ready to make the switch yet.
From Obama’s standpoint, this isn’t a lot to go on, but it’s something. The Romney strategy relies on voters this fall making a simple present-tense judgment and casting their ballots against the president if they don’t think the economy is moving in the right direction. Obama won’t be able to run a “Morning in America” campaign, but he’s counting on context winning out, with a crucial chunk of voters remembering what he inherited (and, perhaps, understanding the obstruction he’s faced from Republicans in Congress) and giving him the benefit of the doubt, even if they’re not enthusiastic about it.
For now, his poll numbers suggest Obama might actually pull this off. But the election is still five months away, and it’s an open question whether his support can withstand more discouraging unemployment reports and all of the Republican attacks to come.