Obama's Mixed Signals

Before all eyes in the country turned to football last night, President Barack Obama told Matt Lauer in his annual pre-Super Bowl interview that he "deserve[s] a second term.” He went on: “We’ve made progress. The key right now is to just make sure we don’t start turning in a new direction that could throw that progress off." It's impossible to hear these words without thinking of the 243,000 new jobs added in January—very good news for an administration whose future rests on the capriciousness of the global economy over the next few months. The wealth of good news has also led to a jump in Obama's approval rating and, for the first time, Obama holds a significant edge over Mitt Romney in a hypothetical match-up; if the election were held today, Obama would win with 51 percent of the vote. 

However, the burst of economic confidence doesn't mean Obama's re-election is preordained. There are still nine months to go until the polls close, and the potential for things to go wrong is still great. The biggest problem is Europe. Greece will most likely default—at this point it's just a matter of how hard the country will fall, and how big the shockwaves for the rest of the world will be. Another reason for caution is the Federal Reserve's forecast for 2012, released last week. The Board raised its unemployment estimate to a range of 8.2 to 8.5 percent and lowered its estimate of real GDP growth to a range of 2.2 to 2.7 percent, meaning that January's good news may be an aberration. Obama is right. The key to his re-election isn't the fact that he's had a few weeks of good news—it's that the economy stays on track until fall. 

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