It’s not “the economy”, stupid

There are certain truths in politics that are held to be self-evident. The electorate doesn’t like divided parties. General elections are usually a battle between “time for a change” and “don’t let the other lot ruin it”. And, of course, “it’s the economy, stupid”. This last golden nugget first appeared in the US presidential election campaign of 1992. If it wasn’t actually unearthed by Bill Clinton’s “ragin’ Cajun”, James Carville, then its directness certainly evoked his personality perfectly. Campaign staffers were not allowed to forget what the key election issue was going to be. Never let any voter contact end without reminding them about the terrible state of the economy under Bush/Quayle, and how much better it would be under Clinton/Gore. The phrase has become a cliché among political campaigners. Only a fool would ignore the importance and centrality of the state of the economy to an election campaign.

So, it’s the economy, stupid. Friday’s third consecutive quarter of GDP growth, this time up 0.8% between July and September, should have been good news for the government and the Conservatives in particular. Friday morning’s YouGov poll gave Labour a six point lead over the Tories. But after that day’s positive economic news from the ONS, Sunday’s YouGov poll showed that Labour had… a six point lead.

Two days are not long enough for good news to sink in, perhaps. The government will hope that 18 more months of growth will be recognised and felt by voters. But there is a bit of a problem here. Official aggregate data – GDP, levels of employment – may look good on paper. Ministers, their civil servants and advisers may get quite excited about them. But people do not live in a world of aggregate data. They live, as it were, as a “data point of one” – that is, as individuals and as members of a family. A quarter of 0.8% GDP growth is neither here nor there for most people. It is almost meaningless, in fact. What matters to individuals is their job prospects, their pay and their cost of living. It is a question of how they feel, not how much they believe in the abstract numbers they hear on the news.

Even the apparently positive jobs data need unpacking. Yes, record numbers of people are in work. But then, the population is bigger than ever before, too. Around a fifth of all part-time workers would rather work full-time – that’s roughly 1.5 million “under-employed” people. And unemployment figures themselves are doubtless flattered by the rise in self-employment over recent years (up by more than 10% since Jan ’09, to 4.2 million). Meanwhile, productivity remains low (another reason why unemployment is not higher, perhaps). It is not a healthy mix. As David Smith, economics editor of the Sunday Times, wrote yesterday: “A rise in employment alongside weak productivity is neither healthy nor sustainable.”

We all know what is happening to wages, and prices. Without higher productivity wages will not rise either, even with continued employment growth. Voters know about this stuff. They know that while economists may detect good news in technical terms, their lives are not improving. The link between that aggregate GDP number and their daily reality has been broken. Put it all together and you can see why one weekend’s good statistical news is not enough to shift many people’s views.

The Conservatives have a difficult balancing act to pull off. If they overclaim on the strength of economic recovery they will sound hubristic and appear out of touch with the concerns of ordinary voters. But if they sound too sheepish or tentative about economic recovery voters might wonder just how convincing or sustainable economic recovery is. I wonder if, paradoxically, continued flatlining (or worse) might not have formed a better election-time backdrop for the Conservatives. This would have allowed them to blame Labour even more aggressively for the difficulties they had inherited – “It was much worse then we thought, we’re going to need more time.” Slow and gentle recovery, on the other hand, may make changing government seem less risky.

Yes, growth has returned, and things are starting to look a bit better. But then, when you stop hitting your head against a wall you tend to start feeling better too. Maybe one of those timeless, “iron laws” of politics is changing as well. It’s not “the economy”, stupid. It’s people’s lives. It’s not GDP, it’s the cost of living. It’s not abstract pronouncements, it’s reality. The party that is seen to understand this will win.