The past 14 days have transformed this election. The financial crisis has catapulted Obama into the lead both nationally and in key states. We have been saying for six months that the political environment has favored the Democrats significantly, but it took a near global financial meltdown for things to finally reach the tipping point. The economic situation has virtually ended John McCain's presidential aspirations and no amount of tactical maneuvering in the final 29 days is likely to change that equation.
Here is our up-to-the-minute take on the campaign:
- The economy is going to get worse before it gets better, and that will drive the election dynamic for at least another 7-10 days.
- Last week U.S. stocks suffered their largest drop since 9/11. The Standard & Poor's 500 Index dropped 9.4% last week to almost a four-year low.
- Employers slashed 159,000 jobs last month - the largest number in five years.
- Factory orders fell 4% in August...the biggest setback in 2 years.
- As of 8 a.m. today, European and Asian markets are tanking and the NYSE is almost certain to open down.
- We believe that when the history of this election is written, September 15th will be seen as the day Obama won (or perhaps the day McCain lost the election). The previous Friday morning it was announced that Lehman was filing for bankruptcy. As the markets prepared to open it looked like we were headed for a downturn. In an apparent effort to bring some stability to the markets, at approximately 9:00 in the morning - during a stump speech in Jacksonville - McCain said "the fundamentals of our economy are strong." That marked the beginning of the end for his campaign. By 2:00 p.m., at his next stop in Orlando, he was backtracking, saying, "The economic crisis is not the fault of the American people. Our workers are the most innovative, the hardest-working, the best-skilled, most productive, most competitive in the world, that's the American worker. My opponents may disagree, but those fundamentals, the American worker and their innovation, their entrepreneurship, the small business, those are the fundamentals of America and I think they're strong." The stock market dropped 505 points that day.
- The window for challenging Obama's character may have closed. Media reports indicate that Team McCain is going to take the gloves off (they have begun by launching attacks on Obama's connection with Bill Ayers). However, it is our sense that this should have been done in August and September, and that at this point it will likely fall on deaf ears. We are not saying that this is not a solid campaign tactic, but in light of the serious (and potentially catastrophic) issues facing the country it seems off-key at best. At worst it seems desperate. Voter opinions of Obama started to shift and harden (in his favor) after that first debate. He became substantially more acceptable. Since that time, the economic situation has made Obama a more acceptable alternative. Character attacks are part of politics and often work, but not when the country is at war and mired in an economic recession.
- At noon today, the Obama team will respond to Team McCain by launching its own attack: a 13-minute "documentary" on McCain's role in the Keating Five scandal in 1989. The S&L crisis of 20 years ago may resonate with voters given the current economic situation.
- Palin did well on Thursday but it was simply a sideshow. The debate drew 73 million viewers (20 million more than McCain-Obama--what does that say about the country?). However, it is almost meaningless. Absent a major gaffe from either VP candidate (certainly a possibility considering the two participants) it was a non-event from a campaign standpoint. Presidential elections are about the top of the ticket.
Latest Polling and the LCG EV Map
The latest Gallup tracking poll shows Obama with a 7-point lead (50% to 43%), his largest since he was nominated at the Democratic Convention. Internals suggest that McCain is hemorrhaging with Independents, women (a group that temporarily moved toward him in late August and early September) and younger voters. Additionally, there is a body of evidence growing that suggests that McCain's unfavorable rating has picked up dramatically in the last 14 days. As perceptions of him have diminished, perceptions of Obama have improved.
As the race has shifted so dramatically in the past two weeks, we have seen the largest swing in our electoral vote count this election. Some of these--like North Carolina and Missouri--are the result of steady improvement in the polls by Obama, both states where his heavy investment in the ground game appears to be paying dividends. Others--like Minnesota and New Hampshire--are the result of polls we hold in high regard showing a large swing toward Obama.As of today we have Obama sitting comfortably with 264 electoral votes. McCain has only 163. It is very unlikely that any of the states we have put in the Obama column will switch to McCain in the coming weeks. Therefore, McCain has to win nearly all of the remaining toss-up states to win in November.
Here are the latest changes as we see it:
- New Hampshire from toss-up to Obama
Kerry won New Hampshire by just 9,000 votes, the first time the state was won by a Democrat since 1996. It appears that McCain's love affair with New Hampshire's independent-minded voters may not be enough to offset the shifting demography of a state that is becoming more and more like its neighbor to the South. A Rasmussen survey released on Friday shows Obama jumping up to a 10-point lead, powered by an 18-point advantage among Independents.
- North Carolina from McCain to toss-up
Bush won North Carolina by at least 10 points both times and yet the Tarheel State is closer than we ever would have thought. Demographically it has moved closer to Virginia and further from the deep red South. It is also a state where Obama has made a heavy investment in both campaign offices and TV advertising. For two weeks Obama has been ahead or within three points of McCain, and a Rasmussen Survey last week was the first to show Obama breaking the 50% mark in North Carolina all year, so this state will definitely be one to watch in the final four weeks.
- Michigan from toss-up to Obama
Michigan was another state won by Kerry (3 points) and Gore (5 points) that Republicans have had their eyes on. While it has been close all summer, the rising Obama tide nationally has gradually increased his lead in this state. In a state that is one of the hardest-hit by the current economic woes--it has a 9% unemployment rate, up nearly two points from this quarter last year--recently Obama has consistently been exceeding the 50% mark. If we adjust for the Palin/convention bounce, it seems that Obama has been steadily gaining for months and is now comfortably ahead.
- Missouri from McCain to toss-up
Missouri--the "Presidential bellwether," to borrow Michael Barone's phrase--was a Bush state in both 2000 and 2004. It was essentially tied heading into the conventions and was another state that evidenced a significant bounce for McCain following the Republican convention. However, the race has tightened and every poll since "Black Monday" shows the candidates within the margin of error--a statistical dead heat and the very definition of a toss-up.
- Minnesota REMAINS Obama Both Kerry and Gore carried the state, Kerry by 3 points, Gore by 2, but it was targeted early on by Republicans (as evidenced by their choice of convention site). McCain enjoyed a huge bounce in Minnesota after the Republican convention in Minneapolis and his choice of Sarah Palin as his running mate, a choice that played well enough with the many hockey moms here that we debated moving it to the toss-up column. However, two polls in the last week show an enormous Obama advantage: a CNN/Time poll had Obama +11, and the usually-reliable Star Tribune poll showed a jaw-dropping 18-point Obama advantage.
The McCain campaign made several missteps last week including campaigning in Iowa (a sure Obama state) and allowing the Palin-Couric interview to be edited and dribbled out over a 7 day period, but the overwhelming force is the deteriorating economy and not even a perfect campaign could weather that storm.
There are more turns to come in this election and it is not over yet but it sure seems like it is.
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