Pedal to the metal

Falling gasoline prices might just fuel President Barack Obama’s re-election hopes. Consumers suffered yet more sticker shock at the pump this spring, causing the US recovery to hiccup again. But prices peaked earlier than last year and have fallen further. That could restore growth just in time to boost Obama’s chances in November.

The cost to fill up the tank is one of the major factors directly affecting average Americans. Between December 2011 and April they were whacked as the price per gallon shot up by a fifth to $4. That accompanied a slowdown in the economy, much as a similar plunge did last summer.

But a quick drop means a gallon now costs $3.50 on average. In 2011, it took four months for the economy to pick up after prices began to decline. A similar response this time round would mean a recovery kicking in by August. That would give Obama three months of solid improvement before Americans head to the polls.

There’s still plenty of sobering economic data. Monthly job growth has slowed from above 250,000 to below 100,000 since April. Consumer sentiment has fallen for four straight months, according to the Conference Board. And GDP growth is stumbling along at under two per cent a quarter.

Even if unemployment falls to eight per cent, it will still be higher than when Gerald Ford, Jimmy Carter and George H W Bush each failed in their re-election bids. It may be different this time, though: unemployment has fallen nearly two percentage points since peaking and the economy has been adding jobs for 27 months straight. Compare that to Bush Sr.’s administration, when unemployment peaked the summer before the election and barely declined by November.

Unlike the elder Bush, Obama did not preside over a developing recession. The current president’s sin was failing to lead the nation into a rapid, robust recovery. But Americans feeling more optimistic about the direction of the economy as they stare down at their ballot - and how much it cost them to drive there - could provide the boost the president needs to stick around for another four years.