As the election year began, conventional wisdom was pretty well set about the outcome of the presidential race. If the economy improved, President Obama would win. If not, he'd be a one-termer.
So what does it mean that many big economic indicators are moving sideways?
"Obama seems to be in that gray area," says Paul Pierson, a political scientist at the University of California, Berkeley. "The numbers are neither so good nor so bad that they give you a definitive answer."
The economy as a whole is growing, but at a tepid pace. Jobs are being added every month, but not terribly many. The unemployment rate has ticked down, but largely because many people have grown discouraged and given up the hunt for work. Then there's the cost of gasoline, which shot up this spring but has fallen recently.
All of this translates into a sense among average voters that while the economy is stronger than it was, it's not improving fast enough for their liking. Economic confidence, as measured by Gallup polls, has improved since taking a dive with all the congressional squabbling over the debt ceiling last August. It's still under water, though.
"More people are negative than positive about the economy," says Frank Newport, Gallup's editor in chief. "It's precarious. Everything points to this kind of teeter-totter race that could go either way."
Lessons From Europe
It couldn't have been encouraging for the White House to see French President Nicolas Sarkozy lose his re-election bid May 6.
He wasn't the first European Union leader deposed due to voter anger over the economy. Over the past year or so, six other heads of state or ruling parties also have been forced out of power, largely over austerity measures imposed when the eurozone's economy imploded in 2008 — around the same time the U.S. was having its own financial meltdown.
There's also a sense in Europe that things are still getting worse. "The problem with the European austerity regime is that there haven't been any positive results that people can see," says Bill Galston, a senior fellow at the left-leaning Brookings Institution who served as an adviser to President Bill Clinton. "Right now, it's all pain for no gain."
In other words, says Henry Olsen, vice president of the conservative American Enterprise Institute, Europe has been demonstrating what the state of the economy can mean for presidential politics in the U.S. – but not necessarily what will happen.
"If people aren't seeing an appreciable gain, if there's not a general sense that the economy is getting better, it's not a good sign for Obama," Olsen says.
Ancient History Won't Matter
Obama has the option of blaming his predecessor for some of the country's continuing economic problems, and can point out the ways things have gotten better on his watch. But it won't matter whether things look better in November than they did when he took office in January 2009, suggests Pierson, the Berkeley political scientist. What matters is the trend: whether things look better on Election Day than they did a few months earlier.
"It's key to look at the direction and the rate of change," says Ruy Teixeira, a Democratic political analyst at the liberal Center for American Progress. "In the U.S., things are getting better, even though the situation is not great."
Obama also has to demonstrate that he has a plan for moving the economy forward, says Phillip Swagel, an economic policy professor at the University of Maryland who served as an adviser to President George W. Bush. With his jobs package stalled in Congress and the chance of further stimulus next to nil, Obama needs to put forward a coherent and convincing plan of how he'll make things better in a second term.
"Obama can say he did the stimulus and took action on financial reform," Swagel says. "But as to 'here are the things we're going to do going forward,' he hasn't said it yet."
The Romney Alternative
Swagel notes that former Massachusetts Gov. Mitt Romney, the presumptive Republican nominee, also needs to boil down his economic message. His multi-item agenda hasn't been distilled into a coherent vision that the average voter can connect with.
"Romney has to establish nontechnical credibility," says the AEI's Olsen. "It's one thing to know that someone has technical expertise, but emotional intelligence matters, too."
In a Gallup poll last week, Romney got higher marks than Obama when it comes to the economy, but the president came out on top in terms of likability.
"Romney is seen as a colder technocrat, but he does have an advantage in handling the economy," says Gallup's Newport.
Echoing attacks from Romney's GOP rivals, Obama on Monday launched a TV and Web campaign criticizing Romney's record on job creation while at the private equity firm Bain Capital.
All of which brings the president's prospects back to where they've been for nearly his entire term: If the economy gets better, he'll likely win, but if things get much worse, he may well be congratulating President Romney next January.
Galston, the veteran of the Clinton administration, recalls one of the most often-cited quotes about contemporary presidential politics: "It's the economy, stupid."
"The economy will be even more central this year than in 1992, when James Carville made up his famous slogan," he says.