An Economic Bump

A tiny bump of economic good news has supporters of President Obama crowing about how this will guarantee his reelection. The conventional wisdom is that the best chance the Republican Party has of capturing the presidency is by running on the economy.

Although reports conflict on what is actually happening, the official numbers on unemployment have dipped slightly. If the CPI is to be believed, the number has actually dipped under 9% for the first time since 2008.

Running on this meager improvement in the economy would not be a good idea if the goal is to win in November. In spite of statistical improvements and a climbing stock market, these improvements are not reflected in the experience of those outside the government-financial complex. It presents the Obama administration as detached and aloof, disconnected from the concerns of the average American. Ironically that is probably the campaign attack Obama wishes to use against Romney should Romney become the Republican nominee.

The thing to watch is inflation. The inflation that Austrians have been predicting (and Keynesians have laughed because it didn’t instantly appear) is arriving. It is expressing itself most heavily in energy prices at this time, above the rises that would be expected simply from the saber rattling going on. It is also expressing itself in the stock markets, but people consider that to be good when stocks are up.

President Obama will probably win in spite of the economy, not because of the economy. Hyping up his achievements with regards to the economy seems like an odd strategy as a result.