Economic Sentiment Stirs; Does it Change the Dynamic?

ABC News' Gary Langer and Greg Holyk report:

The nation's economic ice jam is showing tentative signs of a thaw, warming some political sentiment along with it. The question: Whether the change amounts to enough to boost Barack Obama - and incumbents generally - in the election year ahead.

The jury's out because the mood remains so glum: Sixty-eight percent of Americans in the latest ABC News/Washington Post poll still say the country's headed seriously off on the wrong track. But that's down from 77 percent in September, and "right direction" ratings, at 30 percent, while weak, are their best since June.

Economic sentiment strongly informs the political mood. Forty-five percent of Americans now say an economic recovery is under way, still fewer than half, but up by 9 points from two months ago. The president's approval rating on handling job creation has advanced by 6 points to its best in nearly two years. And the number of Americans who say they've gotten worse off financially under this president has eased by 5 points since September, to 30 percent.

There's still a deep chill. This poll, produced for ABC by Langer Research Associates, finds that even with his gain on jobs, 51 percent disapprove of how Obama's handling them. Despite the change in "worse-off" ratings, twice as many have lost ground financially under Obama as say they've moved ahead. And while more say a recovery's begun, three-quarters of them also say it's a weak one.

There's also one particular risk ahead: The federal Energy Information Administration reported yesterday that the price of gasoline has risen by 16 cents in the past month to an average $3.39 a gallon, its highest in any January in records since 1990. If gas keeps rising, the recent, tentative advances in economic and political sentiment would be imperiled.

Those are some of the push-pull sentiments in place as Obama approaches the start of his fourth year in office, his third State of the Union address next week - and what promises to be a tumultuous election year ahead.

THE DYNAMIC - As reported Monday, Obama has a 48 percent job approval rating overall, up from his career low 42 percent in October. His challenge is that of the four previous presidents since 1940 to enter their re-election year with less than 50 percent approval, just one won re-election, Richard Nixon in 1972.

Still, if the dynamic remains problematic for the president, it's less bad than it's been. Views of his personal attributes could be worse: Fifty-one percent of Americans say he understands the problems of people like them, as many see him as a strong leader and 49 percent say he shares their values. While none is robust, the first two are numerically over half, an important benchmark. And Obama's rating on empathy is 8 points better than George W. Bush's 43 percent at this point in 2004 - the year Bush went on to win a second term.

Moreover, substantially more Americans - 61 percent - say Obama "sticks with his principles," an issue on which he may seek to draw comparisons with Mitt Romney, should the current Republican frontrunner secure his party's nomination.

At the same time, Obama has a performance deficit: More than half, 52 percent, say he has not accomplished much since taking office - and of those who say so, most say it's his own fault, as opposed to that of the Republicans in Congress. That may make four more years a tough sell - and could weaken the president's efforts to run against the Republicans in Congress, despite that institution's record-low popularity.

ISSUES and TRUST - Other results on issues and trust demonstrate the half-empty/half-full position of the Obama administration on the eve of its fourth year:

- While just 41 percent approve of Obama's handling of the economy, that's up by 6 points from his low in October, matching his best since April. More useful to him, in the campaign ahead, is that more Americans continue to blame George W. Bush than Obama for the nation's current economic problems, by 54-29 percent.

Part of the reason the blame game breaks for Obama: There are substantially more Democrats and liberals who blame Bush (roughly eight in 10) than Republicans and conservatives who blame Obama (57 and 49 percent, respectively).

- Obama's 45 percent approval on jobs is, as noted, his best since February 2010. He leads the Republicans in Congress in trust to handle this central issue, by 45-37 percent, and likewise leads, by 48-35 percent, in trust to better protect the middle class - likely to be two key themes of the political year ahead. On trust to handle the economy, taxes and the deficit, Obama and the Republicans in Congress run evenly.

- Obama's approval rating on handling taxes is now 45 percent, his best since July, with disapproval easing by 6 points from its peak in November. But he remains especially weak on the deficit, 35 percent approval, a good argument for his eventual Republican opponent.

- The president continues to score best on handling terrorism - 56 percent approval - and has a slightly positive score, 49-44 percent, on handling international affairs more generally. But the situation with Iran is a risk for him; by 48-33 percent, Americans disapprove of his performance dealing with that country's suspected efforts to obtain nuclear weapons.

- Among groups, the gain in views that the country is headed in the right direction is most pronounced among college graduates and middle-income earners (up by 18 and 16 points, respectively, from November). Obama's approval ratings on job creation have improved most noticeably from his October low among women, young adults and those earning less than $50,000 per year.

TAKING STOCK - The state of the economy during the next year will play a critical role in Obama's re-election hopes - 51 percent say it's their most important issue in their choice for president. The critical question is whether the recent slight improvements continue - or, as happened a year ago, turn south again.

Obama's governed during the worst economic slump since the Great Depression, with unemployment averaging 9.3, 9.6 and 9 percent during his first, second and third years in office. From a high of 10 percent from October 2009, though, it's eased to 8.5 percent last month. An improving trajectory in unemployment came just in time to assist Ronald Reagan's re-election in 1984; the question for Obama is whether recent gains continue, and how robustly.

As noted, blame for Bush on the economy has provided Obama with much-needed cover. His approval rating, a mere 11 percent among people who chiefly blame him for the country's economic problems, soars to 75 percent among those who blame Bush.

Nonetheless, "are you better off?" a powerful question for Reagan, does not bode well for Obama: Just 15 percent answer affirmatively, while, as noted, 30 percent say they've gotten worse off financially since he took office. That's a worse ratio than it was when George H.W. Bush lost office in a storm of economic discontent in 1992.

These views dramatically impact perceptions of Obama; ratings of his handling of his job overall, the economy, jobs, taxes, the deficit and even the seemingly unrelated topics of terrorism and international affairs are at least three to four times lower among those who are worse off vs. those who are better off.

Beyond ratings of the economy's progress, another result to watch cuts to the current debate on economic fairness. As noted in Tuesday's analysis, Americans by 55-35 percent say "unfairness in the economic system that favors the wealthy" is a bigger problem for the country than "over-regulation of the free market that interferes with growth and prosperity." That puts majority sentiment more on the customary Democratic than Republican side of the argument. What remains to be seen is whether Obama can harness it to his benefit between now and Election Day - while deflecting enough blame for the economy to convince voters he deserves a second term.

METHODOLOGY - This ABC News/Washington Post poll was conducted by telephone Jan. 12-15, 2012, among a random national sample of 1,000 adults, including landline and cell-phone-only respondents. Results have a margin of sampling error of 3.5 points for the full sample. The survey was produced for ABC News by Langer Research Associates of New York, N.Y., with sampling, data collection and tabulation by Abt-SRBI of New York, N.Y.