Free Markets, Free People


Economic Statistics for 4 Oct 11

Today’s economic statistical releases:

ICSC-Goldman reports stronger chain store sales, rising 0.1% for a 3.7% year-on-year increase, up 1% from last week. Meanwhile Redbook reports a slight drop in sales, to a same-store year-on-year rate of plus 4.1%.

Factory orders fell 0.2% in August, though this is a bad comparison with the previous month due to that reports surge in vehicle orders.

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The government’s war against cheap fuel

Harold Hamm, CEO of the country’s 14th largest oil company, Continental Resources, is featured in the WSJ today.  He talks about oil, gas and his belief, given what he knows about our reserves, that we could be completely energy independent from OPEC if we’d exploit them.

Or, as the title of the piece says, North Dakota could be the Saudi Arabia of the 21st century.  He thinks our technology for recovery of oil and gas is at such a state now that we could economically extract gas and oil that was previously unrecoverable and do it at a very nominal price.

So Mr. Hamm goes to Washington and has a chance to meet President Obama.  He has a moment alone with him and tries to get the message across.

When it was Mr. Hamm’s turn to talk briefly with President Obama, "I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC. I wanted to make sure he knew about this."

The president’s reaction? "He turned to me and said, ‘Oil and gas will be important for the next few years. But we need to go on to green and alternative energy. [Energy] Secretary [Steven] Chu has assured me that within five years, we can have a battery developed that will make a car with the equivalent of 130 miles per gallon.’" Mr. Hamm holds his head in his hands and says, "Even if you believed that, why would you want to stop oil and gas development? It was pretty disappointing."

Disappointing?  It’s vesting our future in a myth (or at minimum a hope) while ignoring what we have in front of us upon which our economy runs.

Daniel Yergin hits the point:

With all the excitement over renewable energy, it might be reasonable to assume that fossil fuels such as coal, oil, and natural gas will go the way of the steam engine in the next 20 years.

Not so fast, says Daniel Yergin, author and one of the most influential voices in the world of energy.

"There is always the possibility that something big will happen very quickly, but probably not," Yergin said in an interview this week before delivering a lecture at the Free Library of Philadelphia.

"On a worldwide basis, about 80 percent of energy today is oil, gas, and coal. You say, What’s it going to be in 2030? Most studies say somewhere about 75 percent of the bigger pot."

Said another way, we should be doing everything we can at this moment to do two things – increase our oil and gas supplies and create jobs.  The oil and gas industry promise an abundance of both.

As for our alternate or green fuels – yeah, maybe some day as Yergin, who has spent years researching them, admits, but not anytime soon:

"I’m convinced there will be major changes," he said. "But given how massive the energy system is, how complex it is, things just don’t happen overnight."

Existing energy systems contain an enormous amount of embedded capital. New technologies have long lead times. Automobile fleets take a decade to turn over. And world energy demand is expected to grow 35 to 40 percent by 2030.

Wind turbines, after decades of development, are only now cost-competitive, he said. Photovoltaic cells, first used in spacecraft in 1958, still require subsidies.

"It’s not a light switch where you can go from one to another," he said.

Precisely.  It’s like trying to turn an aircraft carrier around that is going full speed … it not only requires miles and miles of ocean but a lot of time.  We’re not going to transition to any alternate or green energy source in the foreseeable future – gas and oil will continue to play a dominant role in our economy.   And it is high time we began to earnestly exploit our reserves.

Anyway, back to Harold Hamm.  Why is Mr. Hamm so excited about North Dakota?  Bakken shale:

How much oil does Bakken have? The official estimate of the U.S. Geological Survey a few years ago was between four and five billion barrels. Mr. Hamm disagrees: "No way. We estimate that the entire field, fully developed, in Bakken is 24 billion barrels."

If he’s right, that’ll double America’s proven oil reserves. "Bakken is almost twice as big as the oil reserve in Prudhoe Bay, Alaska," he continues. According to Department of Energy data, North Dakota is on pace to surpass California in oil production in the next few years. Mr. Hamm explains over lunch in Washington, D.C., that the more his company drills, the more oil it finds. Continental Resources has seen its "proved reserves" of oil and natural gas (mostly in North Dakota) skyrocket to 421 million barrels this summer from 118 million barrels in 2006.

"We expect our reserves and production to triple over the next five years." And for those who think this oil find is only making Mr. Hamm rich, he notes that today in America "there are 10 million royalty owners across the country" who receive payments for the oil drilled on their land. "The wealth is being widely shared."

The fact is that over the next few years, Bakken is going to provide huge employment opportunities, taxes, you name it – all of the positives that get an economy going again.

How much?  Well that’s still to be determined, but if our experience with the Barnett shale formation down Texas way is any example, lots.  Here are the results of a recent study of the impact of the exploitation of Barnett shale by the Perryman Group [pdf]:

More than 9 trillion cubic feet of natural gas have been produced from the Barnett Shale.  Currently, 24 counties have producing wells, with permits issued for a 25th county.  

Although exploration activity slowed during the economic  downturn, production from the Barnett Shale continued to rise, topping 1.8 trillion cubic feet in 2010. 

More than 70 rigs are currently drilling in the Barnett Shale. 

The Perryman Group estimated the positive effect of Barnett Shale related activity on the regional and state economies.  This economic stimulus stems from (1) exploration, drilling, and related activity; (2) pipeline investments and related operations; and (3) royalties and lease bonuses.  In addition, the oil and gas companies involved donate millions to area charities and pay substantial ad valorem taxes. 

The Perryman Group estimated the 2011 total effect of Barnett Shale activity to include $11.1 billion in annual output and 100,268 jobs in the region.  While the majority of the stimulus comes from exploration and drilling, pipeline development and royalty and lease payments also contribute to the overall impact. 

For the state as a whole, Barnett Shale-related activity leads to estimated 2011 gains in output (gross product) of almost $13.7 billion as well as 119,216 jobs. 

The Perryman Group estimates that the cumulative economic benefits during the 2001-2011 period include $65.4 billion in output (gross product) and 596,648 person-years of employment in the region.  For the state as a whole (including the Barnett Shale region), the total benefits over the 2001-2011 period were found to include $80.7 billion in output (gross product) and 710,319 person years of employment.

Approximately 38.5% of the incremental growth in the economy of the region over the past decade has been the result of Barnett Shale activity.  Moreover, the overall economic contribution of this phenomenon now constitutes about 8.5% of the local business complex. 

Activity in the Barnett Shale is also an important source of tax revenues to local entities as well as the State.  The Perryman Group estimates that in 2011, counties, cities, and school districts in the region will receive some $730.6 million in additional fiscal revenues due to the Barnett Shale and related activity. 

The State will likely receive another $911.8 million, for a total gain in local and State taxes of an estimated $1.6 billion. 

Over the entire 2001-2011 period, The Perryman Group estimates that local taxing entities received an additional $5.3 billion in tax receipts, with another $5.8 billion to the State. 

It would seem to most reasonable and rational people that encouraging this would be the smartest and one of the most effective ways to help the economy recover.

But apparently that’s just not the priority – at least when it comes up against the political agenda pushing the myth of instant green energy if we’ll just pour more money into it.

So, instead we get this:

Washington keeps "sticking a regulatory boot at our necks and then turns around and asks: ‘Why aren’t you creating more jobs,’" he says. He roils at the Interior Department delays of months and sometimes years to get permits for drilling. "These delays kill projects," he says. Even the Securities and Exchange Commission is now tightening the screws on the oil industry, requiring companies like Continental to report their production and federal royalties on thousands of individual leases under the Sarbanes-Oxley accounting rules. "I could go to jail because a local operator misreported the production in the field," he says.

The White House proposal to raise $40 billion of taxes on oil and gas—by excluding those industries from credits that go to all domestic manufacturers—is also a major hindrance to exploration and drilling. "That just stops the drilling," Mr. Hamm believes. "I’ve seen these things come about before, like [Jimmy] Carter’s windfall profits tax." He says America’s rig count on active wells went from 4,500 to less than 55 in a matter of months. "That was a dumb idea. Thank God, Reagan got rid of that."

A few months ago the Obama Justice Department brought charges against Continental and six other oil companies in North Dakota for causing the death of 28 migratory birds, in violation of the Migratory Bird Act. Continental’s crime was killing one bird "the size of a sparrow" in its oil pits. The charges carry criminal penalties of up to six months in jail. "It’s not even a rare bird. There’re jillions of them," he explains. He says that "people in North Dakota are really outraged by these legal actions," which he views as "completely discriminatory" because the feds have rarely if ever prosecuted the Obama administration’s beloved wind industry, which kills hundreds of thousands of birds each year.

Continental pleaded not guilty to the charges last week in federal court. For Mr. Hamm the whole incident is tantamount to harassment. "This shouldn’t happen in America," he says. To him the case is further proof that Washington "is out to get us."

And everything we’ve seen seems to agree with Hamm’s assessment.   He’s completely right about the wind power point.  In fact, the California condor, which was finally removed from the endangered species list, is probably going to end up going back on because so many have been killed by wind mills.  Not a peep from the Feds.

The government floods green energy—a niche market that supplies 2.5% of our energy needs—with billions of dollars of subsidies a year. "Wind isn’t commercially feasible with natural gas prices below $6" per thousand cubic feet, notes Mr. Hamm. Right now its price is below $4. This may explain the administration’s hostility to the fossil-fuel renaissance.

This administration’s policies are simply absurd to say the least.

We have the means, the technology and the will to exploit these natural resources.  They will provide millions of jobs (both direct and indirect) – good, high paying jobs.  That also means increased revenue at all levels of government, not to mention more and more energy security.

Mr. Hamm calculates that if Washington would allow more drilling permits for oil and natural gas on federal lands and federal waters, "I truly believe the federal government could over time raise $18 trillion in royalties." That’s more than the U.S. national debt, I say. He smiles.

Even if that’s only half true, what’s not to like or want, especially now in our current economic situation?

I have no idea …. ask President Obama.


Twitter: @McQandO

Economic Statistics for 30 Sep 11

Today’s economic statistical releases:

Personal income unexpectedly declined by -0.1% in August, while personal spending rose by 0.2%. The report also indicates that overall prices are 2.9% higher than the same period last year.

The Reuter’s/University of Michigan’s consumer sentiment index rose to 59.4 from 57.8. Consumer assessment of both current and future conditions improved.

The ISM Chicago Index rose to 60.4 on a sharp increase in new orders at firms in the Chicago area. A reading above 50 generally indicates an expansion. This report is always reviewed for indications of what the national ISM report will be. The national ISM Index will be released on Monday.

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More polling which points to electoral trouble for the President

As I pointed out yesterday, taken singly, polls indicate a snapshot in time.  Taken collectively and analyzed, they provide trends.  And those trends combined with the trends in other polls can mean good news or big trouble for incumbent politicians.

In the case of Barack Obama, they’ve repeatedly promised trouble.   The latest?  Public opinion on the state of the economy.

Not good:

Three years after a financial crisis pushed the country deep into recession, an overwhelming number of Americans – 90% – say that economic conditions remain poor.

The number, reported Friday in a new CNN/ORC International Poll, is the highest of Barack Obama’s presidency and a significant increase from the 81% who said conditions were poor in June.

Of course when politicians see polls like this they look for whatever good news they can find:

For a White House now fully engaged in re-election efforts, there is one shred of good news: More than two and half years after inauguration day, Americans are still more likely to blame former President George W. Bush for current economic conditions.

The public has a bit of a incorrect view of the matter but such is life:

Asked which administration is to blame, 52% of Americans blame the previous Republican regime, while only 32% point a finger at Obama and Democrats.

There wasn’t a “Republican regime”.  There was a Democratic Congress for the final two years of the Bush presidency.  And, of course, while 52% may still blame Bush, didn’t they hire Obama to fix the economy? 

Meanwhile, enter Joe Biden, the Vice President of the United States, with his usual wonderful timing, blurts out the political truth:

“There’s a lot of people in Florida that have good reason to be upset because they’ve lost jobs. Even though 50 some percent of the American people think the economy tanked because of the last administration, that’s not relevant,” Biden told WLRN’s Phil Latzman.

“What’s relevant is, we’re in charge. And right now, we are the ones in charge, and it’s gotten better but it hasn’t gotten good enough. And in states like Florida it’s even been more stagnant because of the real estate market. I don’t blame them for being mad. We’re in charge, and they’re angry.”

That’s right – three years in, for better or worse, it’s their economy.  Biden finally has one right.  Now it’s up to the GOP to push that point home.  And 3 years of pitiful performance is going to see the “Bush’s fault” excuse wear thin. 

Of course the final poll comes in November of 2012.  That’s the time this administration has to change the direction of the economy and the growing perception of poor leadership and a lack of viable solutions.  The economy is indeed theirs, and political opponents will make sure that everyone knows they’ve been in charge (2 years with a Democratic Congress at the most critical juncture) while the economy has performed so dismally.

It’s all there in the record.


Twitter: @McQandO

ECRI Changes Outlook From Slowdown to Recession: Updated with Official Statement at 11:25 AM CST

(Cross posted at Risk and Return)

Okay, I have been sitting on this since Monday, but last week ECRI changed their call from a severe global slowdown to an actual recession here in the US. It was just announced on Bloomberg radio:

He told Tom Keene that a recession is the “overwhelming message coming out of our forward-looking indicators.”

And more ominously: “It is not reversible.”

“The U.S. economy is tipping into a new recession,” he said, adding, “We don’t make these calls lightly.”

He cites “dozens of leading indexes for the U.S.” and “contagion in what is going on among those leading indicators. It’s wildfire, it’s recessionary, it is not reversible.”

The ECRI has been saying since June that a lasting and persistent global slowdown was inevitable and the view has been turning more and more negative. You can see video of Lakshman Achuthan discuss their conclusion in June here, and at the end of August here.

Last Wednesday, the Economic Cycle Research Institute issued its U.S. cyclical outlook, summarized with “Economy on Recession Track – The jury is in, and the verdict is recession.” We look at a lot of things in setting our own expectations, but we’ve found the ECRI to be very useful in confirming or questioning our own conclusions. While the ECRI’s weekly leading index went through a worrisome deterioration in 2010 and concerned us a great deal, ECRI itself never issued a recession warning. Last week, they did.

“Today, we must sound the alarm bells loud and clear. ECRI’s leading indices of U.S. economic activity have turned down in a textbook sequence – first the U.S. Long Leading Index, then the Weekly Leading Index, and finally the U.S. Short Leading Index. Their growth rates are also in cyclical downswings, as are the growth rates of every one of ECRI’s sector-specific leading indexes. Under the circumstances, there is no indication that a reacceleration in economic growth is near at hand.

“In the process of scrutinizing the evidence, we examined every one of these leading indexes to check whether they are in pronounced, pervasive and persistent (three P’s) downturns consistent with a ‘hard landing,’ namely, a recession, rather than a non-recessionary slowdown. After examining the three P’s for all of these leading indexes, we found that the overwhelming majority of their trajectories are currently in recessionary configurations. In practice, such a finding is sufficient to justify a recession call.

“A useful way to summarize the evidence we see pointing to recession is to examine the spread of weakness among the components of ECRI’s U.S. leading indexes of economic activity… In that context, the recessionary decline in a summary measure of numerous reliable leading indicators, coupled with an ominous drop in a broad measure of current economic activity representing facts, not forecasts, constitutes a compelling recession signal.”

We have felt that the chances of a recession were much higher than most not only for now, but as a general feature of the post 2008 crisis US and global economy. At this point we are scratching our heads as to why anyone would assume a recession will not occur in the US and in much of the world economy. While nothing is certain, we believe investors should at minimum consider carefully how much they are willing to see their portfolio decline and make sure their portfolio can stay above that mark should a recession occur.

Update: You can hear the entire interview on Bloomberg Radio here.

Update II: Here is the discussion on CNBC

Abnormal Returns has more thoughts on the call and what it might mean for markets. I think the downside is much further than the average of past recessions due to how far off earnings estimates will be given how stretched profit margins have been.

Here is the official statement from ECRI:

U.S. Economy Tipping into Recession

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Public distrust of government has hit an all time high

Yes, I know … what a surprise:

The public’s trust in the federal government has dropped to an all-time low, according to a new national survey.

A CNN/ORC International Poll released Wednesday morning indicates that only 15 percent of Americans say they trust the government in Washington to do what’s right just about always or most of the time. Last September that figure was at 25 percent. Seventy-seven percent of people questioned say they trust the federal government only some of the time, and an additional eight percent volunteer that they never trust the government to do what’s right.
In the past five years the number who say they trust the government "always" or "most of the time" was usually in the low-to-mid 20’s. Before the recession hit that number was usually in the low-to-mid 30’s, and slightly more than a decade ago, it was in the high 30’s or occasionally just over 40 percent.

"The previous all-time low was 17 percent, set in the summer of 1994," says CNN Polling Director Keating Holland. "Before the Watergate scandal, a majority of Americans said they trusted the government always or most of the time, but since 1974 that has happened only during a brief period in 2001 immediately after the 9/11 terrorism attacks."

I’d say this is a well earned distrust.  Over the years, the Federal Government has become more and more intrusive, and we’ve seen our lives impacted more each year by that intrusiveness.   We’ve seen the militarization of the police.   We’ve seen bureaucratic creep into areas that most believe the government has no business.  Government is borrowing and spending at an unsupportable rate, thereby binding unborn generations to debt they had no hand in incurring.  And we’ve seen an unwillingness on the part of government and politicians to modify their behavior and address the problems listed.

Government has always been a “dangerous servant” especially when it has become an arrogant servant.  In fact, what happens, as history teaches us, is government usually tries (and succeeds) to become the master most of the time and uses coercion and violence to have its way. 

Part of the problem is so many people are invested in the idea that government is a panacea for all the perceived ills of human nature and that if done properly, utopia is just around the corner.


It is this sort of thinking that led to the disasters of the USSR, Nazi Germany and many other examples.   What Frederich Hayek called the “fatal conceit”.

What we’ve seen develop in our government over the decades is a tendency toward central planning.  In the name of social justice, more and more of our economy has been brought under government control by various means.  And, as usual, we’re headed in a very predictable direction because of it.  James Piereson explains with some recent examples:

Their efforts to create "green" jobs, stimulate the economy, redistribute income and manage costs in the health care system are all examples of the fatal conceit run amok. A large and modern economy, made up of hundreds of millions of participants who make spending and investment decisions by the minute, is far too complex to allow for centralized coordination. Such efforts, Hayek warned, invariably make a difficult situation worse.

And that’s precisely our experience which of course explains some of the distrust of government.  The “fatal conceit” was something the founders of this country tried to avoid.  Unfortunately it’s very difficult to weed out or prevent from growing (or perhaps metastasizing is a better word) within government regardless of its initial structure, no matter how well thought out.  But we’ve seen the results of the change so many times we ought to be able to recognize it and we obviously should try to avoid it:

[A]ny effort to organize society around a common economic plan will inevitably lead to a loss of freedom and a return of the common man to a condition of servitude and dependence. Hayek reminded his readers that Hitler was not just a nationalist but a socialist as well, and that his brutal tyranny developed out of a malignant synthesis of these ideas. Market liberalism, in contrast to both ideologies, follows no overall plan but allows progress to emerge out of the coordinating actions of free individuals.

Yet here we are pursuing the former to the detriment of the latter.   And by the way don’t mistake crony capitalism for free market capitalism.  Capitalism only demands the private ownership of the means of production.  Whether or not the markets are free isn’t a prerequisite.  Hence the descriptors that differentiate the type.  What we mostly suffer here is crony capitalism as demonstrated by the green agenda and Solyndra, et. al.

But to the main point that ties it all together, again from Piereson:

Hayek wrote the book partly in response to John Maynard Keynes, the British economist who had argued a few years earlier that government could lead the economy out of depression through deficit spending. Keynes believed that this would stimulate consumer demand and private investment.

Hayek was skeptical of Keynes’ theory on economic grounds, but even more so on political grounds. Efforts by the state to manage the economy will certainly fail, he argued, but they will not be abandoned. Every failure would instead lead to more ambitious and extravagant policies to reach the elusive goals, until more and more aspects of the economy are brought under government control. This, Hayek argued, was "the road to serfdom."

Keynes was convinced that war and depression ended all hopes that the liberal order of the 19th century could be revived. His theory represented an effort to place the market system on new intellectual foundations. But Hayek was equally convinced that the tradition of Adam Smith and "The Federalist" had to be renewed as the basis for a restoration of liberty and progress. The intellectual opposition between Keynes and Hayek still underpins many of our current debates.

Keynes may have exercised the greater influence in political and academic circles over the second half of the 20th century, but the tide is turning today.

The problem, of course, is that today’s politician, at least the one’s holding power, still cling to the Keynesian notion that government can positively effect the economy in the face of overwhelming evidence and history that it cannot. Add to that the “social justice” crowd who want to redistribute income and you have a fatal mix who will kill the goose that has been laying the golden eggs.  And because of those beliefs held by each group that even the public has seen through, we continue down a disastrous road that has kindled great discontent and distrust in government.

Most Americans intuitively understand that what is being done by government isn’t what needs to be done, but is instead driven by a mistaken and bankrupt ideology that has spent itself disastrously in numerous scenarios around the world.   There was never any vision among our founders of a behemoth like the government we have today.  Never will you find in any of their writings any inkling that government should be involved in things like health care, energy or even education.  They successfully managed to avoid the fatal conceit, only to see subsequent generations fall into bad habits led by mistaken beliefs that have lead to our present and critical situation.

The problem, of course, is how do we back out of this?  It has taken us decades to get to this point and unfortunately, at least to now, politicians have learned that what got us to this point worked to get them elected.  The incentive for them, at least, to back us out of this isn’t there yet.

And then there are the true believers among them that still actually believe that utopia is possible if only we have more government and a more powerful government.

If the liberal elite wonder what is at the base of the Tea Party movement – a movement this polls suggests is only the tip of the iceberg – they need only reflect on where we started and where we are.   And then review how we did in between those times.

An honest appraisal would find that our greatest progress took place in eras in which government played more of a roll of night watchman than Santa Claus.   When the attempts to use government as the great social equalizer began so did our decline.  It was small in the beginning – almost imperceptible – but in hindsight, certainly recognizable if you bothered to look.  And in the name of social equality, government grew exponentially and with that exponential growth came an equally exponential expansion of power.

And here we are. 

The simple fact of the matter is this isn’t working.  Government is out of control, broken and pulling us all under.  The question is how do we fix it … or is that even possible?


Twitter: @McQandO

Economic Statistics for 29 Sep 11

Today’s economic statistical releases:

The Commerce Department’s final estimate for second quarter GDP was revised upwards to 1.3% annualized, compared to the previous estimate of 1.0%. It’s a mediocre revision to an unimpressive number.

A big 37,000 decline in initial jobless claims last week pushed the total down to 391,000. Claims seem to have been inflated by Hurricane Irene’s aftermath in prior weeks.

The National Association of Realtors reported that the pending home sales index fell 1.2 percent to 88.6. Credit and appraisal problems are on the rise, which indicates future weakness, as well.

Corporate profits in the second quarter were revised upwards to an annualized $1.470 trillion, up 0.3% on a year-over-year basis.

The Bloomberg Consumer Comfort Index dropped to -53 in the period ending Sep 25. That’s the second-lowest reading ever for the index. Confidence by homeowners and part-time workers fell to the lowest level since 1990.

The Kansas City Fed’s Manufacturing Index improved slightly to 6 in September from 3 in August. Readings above 0 generally indicate expansion in activity.

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Economic Statistics for 28 Sep 11

Today’s economic statistical releases:

Last week, mortgage rates dropped, and the Fed announced a switch to longer term treasuries. This sparked a rush of refinancing, as well as new mortgage applications. The Mortgage Bankers Association reports that mortgage applications rose by 9.3%, led by a 11.2% rise in re-fis, and a 2.1% increase in purchases.

Durable goods order fell –0.1% last month, both overall and ex-transportation,  though they were still 12.3% higher than last year.

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Obama: Likeable but incompetent?

One of the enduring truths about national political elections in the US is you can’t win with just the support of your party base.  There just aren’t enough of them. Roughly 30% on the left consider themselves to be Democrats and about the same on the right call themselves Republicans.  Even if a candidate got every vote, he or she is going to be shy of the majority needed to win the office.   So another enduring truth is you must win the independent vote – that big, supposedly moderate 40% in the middle – to win an election.  That’s why you hear people talk about politicians “running to the middle”. 

So when you’re looking at a presidential race or polling, the most interesting demographic are the “independents”, because where ever they’re going or whatever they’re saying is likely to determine the election.

Since early last year, that demographic has been increasingly deserting the Democrats in general and Barack Obama specifically.  To put it succinctly, they’re not at all happy with the condition of the country, it’s direction or his policies even while many of them find Obama to still be likeable.

In 2008, Obama carried independents by a decisive 52% to 44% margin and took 30 states. In 2004, John Kerry narrowly won independents over George Bush 49% to 48%, reversing Bush’s 47% to 45% win against Al Gore in 2000.

In only nine of the last 32 months has the IBD/TIPP Presidential Leadership index been above 50, and the positive months were all in 2009. Since January 2010, the index has stayed in the negative territory (below 50). The averages were 57.5, 44.2 and 44.6 for 2009, 2010 and 2011, respectively.

Independents also believe the country is headed in the wrong direction. Only 19% of them are satisfied with America’s direction and 80% are not satisfied.

But will likeable be enough in 2012?  Not likely.

An overwhelming share of independents (74%) like Obama personally, and 59% believe he has the vision to be president. A similar share (58%) also believe the president cares about the needs of people like them, and 59% think he’s worked hard to bring about change compared with 40% who say that he has mostly talked about it.

On the other hand, 62% disapprove of his policies, and by 63% to 35% they think he lacks the experience to be an effective president. A majority of independents (51%) do not believe that he is someone they would be proud to have as president; only 42% would be proud.

Reality is a stark reminder that performance, not rhetoric  is what counts.  And likeability will only carry you so far. Good intentions are laudable but only if they lead to solid results.  Also of note is most people are willing to give a politician a chance to accomplish things and are even appreciative of hard work and that the politician “cares”.  But the bottom line is that only results get someone re-elected.  To this point, Obama simply hasn’t provided those.  Independents may like him for the most part, but his job performance has not impressed the majority:

Only 15% give Obama an A or B for his handling of the economy, 16% give him good grades for managing the federal budget, and just 12% see him favorably for creating jobs and economic growth.

These low grades more than cancel out Obama’s non-economic successes, including the killing of Osama bin Laden. Nearly eight in 10 (79%) independents say his handling of the economy weighs more in their minds than getting the al-Qaida leader and mastermind of 9/11 (11%).

Funny and ironic … in his run for the presidency, his lack of a resume was probably his biggest strength.  What was to criticize?  What was there to assess?  He sounded great.

Now, on the other side of winning the presidency, he has to finally run on his record.   And, given this poll’s results, it isn’t a good one.


Twitter: @McQandO