By Barbara Hagenbaugh and Sue Kirchhoff, USA TODAY
August 23, 2004

WASHINGTON — The U.S. economy may not give President Bush a boost in his bid for re-election, according to a USA TODAY survey of economists.

Forty-seven economists answered a question both this month and at the end of 2003 on whether the economy would help Bush in the election. In December, all 47 said yes. When surveyed Aug. 13-18, nearly half of those same 47 had changed their minds, with 22 saying the economy would not help Bush.

The results come as record-high oil prices and lower-than-expected job growth have deflated expectations of economic growth ahead of the election.

In December, economists had predicted gross domestic product, the broadest measure of U.S. economic activity, would grow 4.2% in 2004. That forecast dropped to 3.8% in the August survey.

"The economy is not going to be booming as we go into the voting booths," says Paul Kasriel, chief economist at Northern Trust in Chicago. "By the same token, I don't think it's going to be slipping into recession either."

Kasriel and other economists who this time said the economy would not help Bush were quick to say it likely won't hurt him either. Mark Vitner, senior economist at Wachovia Securities in Charlotte, says public perception about the economy appears to be worse than reality. But Bush should be able to successfully attack some of those perceptions.

"The economy is probably a neutral factor for him because he will be able to argue, correctly, that the economy is moving in the right direction," Vitner says.

The economy will likely be one of the top, if not the biggest, issue for voters in November. In a USA TODAY poll of likely voters taken a month ago, the economy came out as the most important issue in the election, above Iraq, terrorism and health care.

There will be a few key pieces of data out before the election, including two more employment reports. The first look at GDP for the third quarter will be released Oct. 29, just before the Nov. 2 election.

Also important will be energy prices, which are elevated pretty much across the board, including for gasoline. Higher energy costs are negative for consumers and non-energy businesses because they force them to spend more money on energy and less in the general economy.

More than 70% of the economists surveyed this month said oil prices were a "somewhat significant" drain on the economy, and 19% said they were a "very significant drain."

Only 9% said oil prices were not a big factor. Most economists said the top short-term threats to the economy were oil prices and the possibility of terrorism, especially on U.S. soil.

In the August survey, 26% of the economists said they thought the odds of a recession had increased.

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