Why Obama, Dems are in deep trouble on economy

In some alternate reality right now, Democrats are banking on a strengthening economy that is the envy of the world as a bulwark against big losses in the midterm elections in November.

Because the economy itself is, in fact, doing pretty well with job growth at an average of more than 200,000 per month (throw out August as an outlier) and an overall expansion rate of over 4 percent. The U.S. is certainly outpacing Europe and even growing faster than Brazil while catching up with a slowing China.

In this parallel universe, President Barack Obama is seizing on rising U.S. economic confidence to help Democrats hold the Senate and fight off significant losses in the House.

In our actual universe, things are very different.

The fact is the economy is a major drag on Obama and the Democrats heading in the midterms, according to the latest Politico battleground poll conducted among likely voters in key Senate and House races.

Has President Obama checked out?
Has President Obama checked out?   

The poll finds the nation still in a deeply pessimistic funk over where the economy is heading. And President Obama gets much of the blame and no credit for significant improvements since the financial crisis.

Among the many troubling findings for Democrats in the poll: 54 percent say the nation is on the "wrong track" to just 19 percent who say it's moving in the "right direction"; 56 percent disapprove of Obama's job as president and 57 percent disapprove of his handling of the economy; only 23 percent say their personal financial situation has gotten better over the last year.

Still, it's not uniformly bad news for Democrats.

Republicans in Congress are held in even lower regard than Obama. And voters are split 38 percent to 38 percent on which party would be better on the economy. The generic ballot matchup pitting a Republican against a Democrat is also evenly split. These are hardly the kind of numbers that presage a huge GOP "wave" election in November.

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Nonetheless, Democrats' hopes to run on a strengthening economy now seem to be totally dashed. There are some obvious reasons for this. Wage gains remain stuck near the rate of inflation, meaning regular people outside the top income brackets do not feel any wealthier or more secure.

That came out in interviews conducted along with the poll. "It's getting worse across the board. Only the people that have the silver spoons are the ones it's going well for," Nicole Chapman, a 38-year-old child care provider in New Jersey, told Politico.

Much of the anxiety also stems from the depth and severity of the financial crisis, which six years later still haunts the American psyche. Pollsters say it will take several more years of strong growth—coupled with real income gains—to turn around people's perceptions of the economy. So Democrats' hopes of turning the economy into a major plus were probably also somewhat fanciful.

But analysts say some blame can also be laid on the administration for not selling the economic recovery harder or making it more clear to the public that the president was constantly on the case of improving the lives of regular people.

These critics say the White House has only focused on the economy in fits and starts, with constant "pivots" away from other issues including health care, immigration and foreign policy.

"One of the reasons the administration is having so much trouble getting traction for the economy is that it may be one of the worst communicating White Houses in recent memory on the issue," said Stan Collender, executive vice president at Qorvis Communications and a longtime D.C. operator who tweets under the handle @TheBudgetGuy.

"The cabinet members who should be talking up the good news—Treasury, OMB and Labor—aren't talking on the issue. The vice president seems to have disappeared and the president doesn't address the economy with enough regularity to convince anyone he's engaged."

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Collender offered an example of the administration's missed opportunities: "The Treasury reported last Thursday that the deficit had fallen dramatically in August. There was no statement from anyone in the administration about the good news."

The White House has been understandably shy about seeming to "spike the ball" on the economy when so many people don't feel things are improving. They have bad memories of taking heat when The New York Times headlined an op-ed from then-Treasury Secretary Tim Geithner "Welcome to the Recovery" in 2010. The recovery quickly lost steam and the administration got beat up for cheerleading a crummy economy (even though they had nothing to do with the headline).

Still, there is a difference between cheerleading a weak economy and consistently building confidence in an improving one.

There probably is an alternate reality in which the White House had a strong, clear, consistent message on economic growth repeated everywhere by cabinet members and other senior officials with significant credibility on the issue. But we don't live in that alternate universe and so Democrats head into the fall facing an anxious nation that considers the president an economic failure.

—By Ben White. White is Politico's chief economic correspondent and a CNBC contributor. He also authors the daily tip sheet Politico Morning Money [politico.com/morningmoney]. Follow him on Twitter @morningmoneyben.