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Conclusions: President Obama’s approval rating is inflating, and with it, his chances of re-election.

Clearly, we’ve been a loud voice in the debate on whether inflation currently exists.   Regardless of how the textbook defines inflation, our view is simply that inflation occurs when prices go higher.  To deny inflation in most commodities is ignorant, but, conversely, deflation continues to occur in housing prices.  Interestingly, now that the dust has settled post the midterm election, we are beginning to see inflation in the approval rating of President Obama, and with it, his chances of a re-election are steadily increasing.

We look at two key measures for Presidential Approval, the Rasmussen Presidential Approval Index and the Real Clear Politics poll aggregate.   We will grant that all polls have their biases, but what matters in polls happens on the margin, and in both of these polls President Obama’s approval is improving:

  • Rasmussen Presidential Approval Index – In its most recent reading this poll was a -8, with a breakdown of 36% strongly disapprove and 28% strongly approve.  As noted in the chart below, President Obama has seen a noted improvement in this poll over the last few weeks as his ratings were mired in the -11 to -20 range for much of late 2010.
  • Real Clear Politics Poll Aggregate – This collection of polls tells much the same story as the Rasmussen Approval Index.  For much of the second half of 2010, President Obama’s approval rating was lower than his disapproval rating.  In fact, his approval rating bottomed on August 10, 2010 at 44.4.  In early January of 2011, President Obama’s approval ratings surpassed his disapproval ratings for the first time since July 22, 2010.  Currently, President Obama has a 49.8 approval rating and 43.8 disapproval rating.

At the same time, since the start of this year, the political futures market has also begun pricing in a more favorable chance for the Democratic Party candidate to win the 2012 Presidential Election.  In fact, this contract is now trading at 60.4, which is close to a 1-year high. So for those who have written off President Obama and the political outcomes associated with him losing in 2012, we would recommend caution. 

But the question remains, what is driving this Inflation in Obama Popularity?  We would point to a number of factors, which include:

  • With the election season behind us, less money is being spent on negative advertisements targeting the President;
  • President Obama is shifting towards slightly more moderate positions in certain areas and, more generally, reaching out to the Republicans in bipartisanship;
  • The stock market has been quite strong over the past few months and has tracked President Obama’s approval rating closely.  While a strong stock market does not help the millions of people on food stamps, it does make those with investable assets marginally more confident; and
  • Finally, the President had an opportunity to show real leadership around the Tucson shooting which was received and perceived favorably by many.

Inflation exists in many commodities and around the globe, but we are also seeing it close to home in the approval ratings of President Obama.

Inflation...In Obama's Popularity - dj rasmussen

Daryl Jones

Managing Director