It's the Jobs, Stupid

The Conference Board’s consumer confidence measure has, since its inception in 1967, been a perfect predictor of presidential incumbent election performance.  As shown in the large figure above, every time the measure has averaged under 95 in the election year, the incumbent has lost; over 95, he has won.

Politicians and pundits seem to believe that gas prices will have a major impact on this November’s election.  “My poll numbers go up and down depending on the latest crisis,” President Obama said in April, “and right now gas prices are weighing heavily on people.” The average national price of a gallon of gas has fallen from $3.94 on April 5 to $3.64 today.  How happy should the White House be?

Not very.  As shown in the small upper right figure, over the past eight years the correlation between gas prices and consumer confidence has been extremely weak.  The correlation between unemployment and consumer confidence, however, as shown in the small lower right figure, has been very strong.

Message to the president?  It’s not gas prices.  It’s the jobs, sir.

Conference Board: Consumer Confidence Index Declines Again

Politico: On Polls, Obama Blames Gas Prices

Bloomberg: Consumer Confidence in U.S. Fell in May to Four-Month Low

Wonkblog: Why Gas Prices Aren't Likely to Decide the 2012 Election