July 19, 2012 7:19 pm

Ben Bernanke and the US election

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Stalled recovery fuels irritable presidential campaign

If Barack Obama was hoping for a last-minute helping hand from the US Federal Reserve, Ben Bernanke may just have put paid to that prospect.

To have any chance of jolting America’s stalled economy before November, the Fed would need to embark on another round of asset buying – or something equivalent – at its next meeting in 10 days. But in his testimony to Congress this week the Fed chairman hinted it would probably need more time before deciding on further steps.

Mr Obama’s die is almost certainly cast. With just over 100 days before the election, the president will go to the polls in an economy stuck somewhere between recovery and double-dip recession. It is hard to imagine it could get any murkier. Yet, as Mr Bernanke implied, it is highly unlikely visibility will suddenly improve. In addition to the Damoclean sword hovering over the eurozone, Washington’s self-imposed “fiscal cliff” has cast another long shadow over the US economy.

For markets, it is a period of deep uncertainty. For voters it is one of restless ambivalence. To be sure, polls show Mr Obama in a dead heat with Mitt Romney. They have been stuck there for several months. It is also clear the economy dominates the voter priority list. Yet the campaign has largely been consumed by questions of character rather than policy – most notably in the focus on Mr Romney’s personal fortune and his background at Bain Capital.

All of which is good news for Mr Obama. Every day the media highlights Mr Romney’s refusal to release more tax returns is one fewer talking about the pallid state of the economy. Every news cycle questioning why Mr Romney is reluctant to discuss his leveraged buyout years is one less devoted to unemployment. And so on until the election is less about “the economy, stupid” and more about “Mr Romney’s character, stupid”. Or so the Obama campaign is hoping, all the way to election day.

After three years of stop-start it is likely voters share Mr Bernanke’s fatalism on the economy – a sense of gloom about what can be done to kick-start it. Most polls do not go into such detail. But it is notable that the public’s trust in US leaders has not budged from the low Mr Obama inherited in 2009. The US economy is sputtering once again. Yet the thing that most animates voters is dislike of one or other of the candidates. These are the contours of battleground 2012. Let us hope they are not fixed.

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