Monday, August 4, 2014

July Month in Review: The Guns of July (August 4, 2014)

It was 99 years and 11 months ago that the world, as they knew it, changed forever. It started with an incident – the assassination of the Archduke of Austro-Hungary – that quickly mushroomed, through a series of interlocking alliances, into what we now call World War I.  The Germans rolled through Belgium, chased a retreating French army in northern France, before bogging down east of Paris along the Seine.  The guns of August thus did not result in a quick German victory, and both sides settled into the defining war of attrition.  Over the next four years, a stunning 16 million were killed, before the Germans surrendered at Compi├Ęgne.

In comparison today’s world seems tamer, and at the same time, more complex.  And yet, the world does seem aflame in July, 2014, and that month’s “incidents,” the downing of a passenger jet over warring Ukraine, the killing of three young Israeli men in the West Bank, along with the torrent of children from Guatemala, Honduras and El Salvador across the U.S. southern border, the march of ISIS across Iraq toward Baghdad, and the continued bloodshed in Syria, make us wonder whether we are on the precipice of some broader conflagration.

It could be that the very thing that makes our modern world more complex also acts as a peculiar obstacle to repeating 1914.  Far from “interlocking alliances,” we find in many of these battles that our enemies on one front are our allies in another.  We need Russia to help blunt the expansion of nuclear arms in Iran.  We need Iraq’s support against ISIS.  We need Egypt to help broker peace in Gaza.  (All of this is well articulated in this article from the New York Times a few weeks ago:  http://www.nytimes.com/2014/07/23/world/crises-cascade-and-converge-testing-obama.html?_r=0 .)  And yet, almost daily a new territory erupts, and no amount of shuttle diplomacy by John Kerry seems adequate to the challenge.

President Obama is, absurdly, held accountable by his opponents for the messiness of the world.  He is expected to counter these vexing foreign policy issues with “strength” and “leadership” despite the murkiness of those terms and the widespread opposition to the use of force (even if force was a viable solution).  His responses have indeed been forceful, if more nuanced than many would like.  For example, Obama has advocated the stiffest of sanctions against Russia from the start of the Ukraine crisis, but it is Europe – with ten times the trading volume with Russia than the U.S. – that has the real leverage.  And only recently have the Europeans stepped up.  And his opponents offer no good or realistic ideas.  I can only shudder at the thought of how John “Long Bomb” McCain might be responding to the varied calamities.

Thus the gradual recovery that we saw in President Obama’s approval rating in the spring has receded, and the months to Election Day dwindle.  Even with an ever-strengthening economy, it is hard to imagine Obama’s “coattails” making much of a positive difference now.  But I still foresee the Democrats holding the Senate and the GOP holding the House, likely picking up a few seats in each chamber, but far from the disaster many foresee.  The GOP is a very unpopular entity right now, and their inaction on the border crisis is yet another example of an issue where they are out of step with the mainstream (gun control, women’s rights, gay rights, etc.) and even unable to assemble a majority within their own party.  And the gridlock label is clearly more affixed to them than to the Democrats.  That will turn Election Day into a very hollow win for the GOP, with many mutterings on November 5th about what might have been.

ECONOMETER

The Econometer soared to a new level, +72.5, and each measure now is improved versus Election Day 2012.  Consumer confidence rose substantially, and the first reading of second quarter GDP showed a robust +4.0% growth.  More than 200,000 jobs were created for the fifth straight month.  All in all, the economy could be a winning issue come fall for the Democrats, particularly if household incomes respond and real estate continues to surge.

Econometer
Election Day 2012
4-May
8-Jun
6-Jul
4-Aug
Econometer
0.0
52.5
56.0
59.0
72.5






  Unemployment Rate
7.9
6.3
6.3
6.1
6.2
  Consumer Confidence
73.1
82.3
84.8
85.2
90.9
  Price of Gas
3.71
3.74
3.75
3.77
3.69
  Dow Jones
 13,330
 16,308
 16,617
 16,882
    16,990
  GDP
3.1
0.1
-1.0
-2.9
4.0


PRESIDENT OBAMA APPROVAL RATING

As mentioned, President Obama gets no love for the economy, and takes the hit for a world gone amok.  His net approval dropped about a point in the month, not a big change, but it is hard to see the catalyst for improvement in the months ahead. 

Obama Approval Rating
Election Day 2012
4-May
8-Jun
6-Jul
4-Aug
  Approve
49.6
44.5
45.6
43.6
43.5
  Disapprove
47.4
51.4
50.5
52.2
52.8
  Net
2.2
-6.9
-4.9
-8.6
-9.3

GENERIC BALLOT

On the other hand, the Democrats have a small but growing lead in the generic ballot, certainly a strong leading indicator for the midterms.

Generic Ballot
Election Day 2012
4-May
8-Jun
6-Jul
4-Aug
  Democrat
46.3
38.0
42.2
41.0
44.8
  Republican
46.0
40.0
41.5
39.1
42.3
  Net
0.3
-2.0
0.7
1.9
2.5

OBAMACARE

There were only two polls this past month on Obamacare, a measure in and of itself of how far this issue has fallen off the radar screen.  By contrast, there were 13 such polls in March.  Those two polls show that the short-term die is cast for Obamacare, as the majority of the nation continues to disapprove of it, no matter how successful it appears to be.  That is, far fewer people are uninsured and health costs in general are rising far less rapidly.  We’ll see soon the growth rate in 2015 insurance premiums, the next major data point in this story.

Obamacare
Election Day 2012
4-May
8-Jun
6-Jul
4-Aug
  For/Favor
40.0
41.0
40.1
41.2
39.5
  Oppose/Against
50.8
50.0
51.7
53.8
58.0
  Net
-10.8
-9.0
-11.6
-12.6
-18.5

2016 DEMOCRATIC PRESIDENTIAL CANDIDATES

Hillary Clinton took the slightest of hits in July, perhaps due to a bit of stumbling on her part on the issue of personal wealth.  The quote: "They don't see me as part of the problem…because we pay ordinary income tax, unlike a lot of people who are truly well off, not to name names; and we've done it through dint of hard work."  Note the slight uptick for the champion of the liberal left (and noted anti-elite) Elizabeth Warren.


2013
2013
2014
2014
2014

Jan-Oct
Nov/Dec
Q1
Q2
Jun/Jul
Clinton
59
67
67
69
63
Biden
13
11
10
13
10
Warren
6
7
7
7
10
Cuomo
4
3
2
2
4
O'Malley
1
1
2
2
1
Schweitzer
1
1
1
1
1
A/O or N/A
16
10
11
6
11

2016 REPUBLICAN PRESIDENTIAL CANDIDATES

Remarkably, the GOP race (if you can call it that at this early stage) got even tighter.  A grand total of 5 points separate the top 9 candidates.  Rick Perry is rising on the strength of the border/immigration crisis, and Rand Paul shows the slightest slippage.  And the big question continues:  will Jeb make a run?


2013
2013
2014
2014
2014

Jan-Oct
Nov/Dec
Q1
Q2
Jun/Jul
Paul
13
14
12
14
11
Huckabee
13
13
14
12
11
Christie
16
19
12
11
11
Bush
12
10
12
13
10
Ryan
14
11
11
11
9
Perry
0
0
6
5
9
Cruz
10
12
8
7
8
Rubio
14
9
8
7
7
Walker
3
5
5
5
6
Santorum
0
0
0
3
3
Jindal
3
3
3
3
3
Other/N.A.
2
5
9
12
15


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