I know I found the GOP convention more than underwhelming – as, it appears, did everyone else. But the core economic fundamentals of this campaign still make Obama’s re-election historically unlikely. One formula for prediction that relies entirely on economic factors shows Obama losing big – with only 45 percent of the vote. But, of course, even its authors understand that politics – as well as economics – matters, and their formula should not have Obama slightly ahead at this point, given unemployment and growth. Reagan won re-election in a landslide with an unemployment rate of 7.4 averaged over his last year. But the improvement was happening in his final year, the perfect timing. More to the point:

Reagan benefited from a 6 percent rise in per capita disposable income in the year ending in September of 1984.

Where’s Obama on this score?

DPI-per-capita-growth-since-2000

You’ll see that nominal average disposable income is up by 10 percent in nominal terms since the trough of the recession, and up by around 5 percent in real terms. But the key point is that average disposable income is back up under Obama in real terms to where it was in December 2007. Here’s another graph from the St Louis Fed of total DPI:

DSPI_Max_630_378

Doug Short summarizes:

The interim trough was in November of 2011. Eight months later, real DPI per capita is up 2.02%. Month-over-month July real DPI per capita growth is up 0.26% and 1.30% year-over-year.

Which means he has a chance – just not as good as Reagan’s – whose recession was much milder and who had far more money to throw at it.