For the last several weeks, nearly every slight improvement in the economy has been followed by an equal and opposite retrenchment. And with less than a month to go before the November elections, President Obama has once again lost the edge on the economy, after it seemed to be turning his way.
The upbeat jobs report from early October had swung the Obamanometer in the president's direction for a few days. But since then, the stock market has drifted down and gas prices have ticked upward. Those two changes pulled the needle back to neutral territory. The rise in gas prices could be temporary, since it was partly due to unexpected refinery outages in California, which have now been resolved. But the stock market could remain subdued, due to concerns about weak corporate profits and political uncertainty.
One surprise: Consumer confidence remains buoyant, despite discouraging news elsewhere in the economy. That might mean that ordinary people sense improvements in the economy that will show up in future data. Or, it could indicate unrealistic expectations among consumers who will soon be disappointed that the economy isn't improving the way they want it to. The most important test of consumer confidence, of course, will come November 6.
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Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter @rickjnewman.
Methodology: The Obamanometer measures 22 economic metrics in 11 broad categories: the S&P 500 stock index, the price of gas, the employment situation, other job indicators, consumer confidence, leading economic indicators, inflation, housing, personal income, consumer spending, and the risk of recession as calculated by Moody's Analytics. The S&P 500 index and gas prices are updated daily, based on the level of change from one week prior. Other indicators are updated weekly or monthly as they come out. Changes are coded on a seven-point scale ranging from -3 to +3, with -3 representing a strongly negative economic development that favors Romney, and +3 indicating a strongly positive development that favors Obama. A score of 0 indicates no meaningful change. The individual scores are averaged each day on a weighted basis. The S&P 500 index, gas prices and the employment situation are weighted to represent one-half of the index value, since those are the most highly visible economic indicators. The other metrics represent the other half of the index value. Each day's overall Obamanometer reading ranges somewhere between -3 and +3. In visual terms, an overall reading of -3 would be represented by the needle pointing all the way to the left, while +3 would be represented by the needle pointing all the way to the right. If the overall reading were 0, the needle would point straight up.