With High Unemployment, Why Is Obama Ahead?

Nate Silver has an excellent post this morning on the Romney campaign’s reaction to the attacks on Bain Capital. The short story is that Romney might be overreacting to the controversy; he continues to equivocate and go on the defensive, despite the thin evidence that these attacks are having an effect on the race. Both Obama and Romney are roughly where they were three months ago, when the general election began in earnest, and polls taken since the attacks began have been inconclusive on the effect of anti-Bain ads.

To show that Romney isn’t underperforming (because of Bain or anything else), Silver looks to his economic model for the election, which predicts a small but solid lead for the incumbent. Moreover, he makes an important point about the economic indicators that matter in the election year: Pace almost all election coverage, unemployment doesn’t actually tell you much about the final outcome of an election:

In plain English, what this chart says is that there’s almost no relationship between the unemployment rate on Election Day and the fate of the candidates. It’s fun trivia to note that Obama is running with the highest unemployment rate since 1936, but alone, it doesn’t say anything about Obama’s position with the electorate.

By contrast, there is a significant relationship between final election outcomes and either GDP growth or growth in personal income. Indeed, if you’re trying to explain Obama’s continued strength in the polls—despite a sluggish economy—look no further than the fact that growth is positive on both counts. This isn’t to say that it’s good—the economy is predicted to have grown by 1.3 percent in the second quarter, and income is up by only 0.3 percent—but that it’s unusual for incumbents to lose when there’s any growth at all.

If Romney can successfully make the case that this growth is insufficient, then he’ll be in a good place. But his overreaction on Bain is crowding out space for an effective argument on the economy, and leading him to attack Obama on issues—like "crony capitalism"—that don't actually resonate with the public. Romney's best bet would be to settle the controversy over Bain, and take whatever damage that comes; at this point in the race, he could still recover. Unfortunately for the campaign, Romney doesn't seem willing to take that step.