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Beyond Wall Street, economic hardship worsens to Obama’s advantage

Dante Chinni

Posted: 10.13.2008 / 11:01 AM PDT

For many Americans, the large-scale tumult in financial markets and on Wall Street has not yet hit home in a real way. The effects will probably be longer term.

For most families, other factors are hitting their pocketbooks in a more immediate way: think fluctuating gasoline and food prices, more home foreclosures, and rising unemployment levels. As the election draws near, such factors are worsening, according to the latest Economic Hardship Index.

The average October hardship score, a composite of key economic indicators prepared for Patchwork Nation, is 20 – the highest reading in the index’s five-month history. A map showing hardship levels indicates that some key states in the election – Michigan, Ohio, and Florida – have been hit particularly hard.

A look at the hardship scores by community type reveals worsened scores for nearly all 11 kinds of locales identified in Patchwork Nation. This includes the two biggest battleground community types – the wealthy, largely suburban “Monied ’Burbs” and the growing, diversifying “Boom Towns.”

The highest reading for October went to the heavily African-American “Minority Central” communities. Their hardship number jumped by five points in one month – in part because of the high cost of gasoline in the hurricane-affected Southeast, where many of these communities are located.

The aging “Emptying Nests” communities also saw a big bump in their hardships score – more than two points – due to an increase in foreclosures.

The communities seeing the least amount of hardship in this index – the politically crucial “Monied ’Burbs” – are seeing the most fallout from Wall Street’s troubles. These communities, which hold 38 million people, are the most heavily invested in the stock market. Thus, no one is really unscathed by the broader economic turmoil.

Surely there is some connection between the financial markets’ problems and more-immediate economic challenges, particularly where foreclosures are concerned. But Wall Street’s problems are more of an issue for the higher end of the American income scale (at least for now). The other slowdown is particularly hard on people without a lot of savings or income.

All this bad news is, to some extent, good news for Sen. Barack Obama, who polls show gets the edge from voters focused on the economy.

In surveys, Senator Obama appears to have made some voter gains – in the traditional battleground states of Michigan, Ohio, and Florida, as well as in traditionally Republican territories such as North Carolina and Virginia. A look at the October hardship map may indicate why: These places have a lot of deep red in them – the marking for high hardship.

If there is good news for Sen. John McCain in the map, it may be the relatively low economic hardship in Minnesota, Iowa, Colorado, and, to some extent, Pennsylvania. Those states are generally thought to be battlegrounds, though poll numbers in Iowa and Pennsylvania in particular seem to show those states swinging toward Obama.

Senator McCain may also take some comfort in the relatively low amounts of economic hardship in the communities mostly in and around military bases (“Military Bastions”) and those in rural agricultural areas (“Tractor Country”). Both of those community types tend to vote heavily Republican, though they are the types with the least amount of population.

In recent weeks, the McCain campaign has talked about wanting to change the primary subject of the presidential campaign from the economy, which he feels is a weakness for him. But the hardship numbers, plus the dips in the Dow, make this a next-to-impossible task.

Whoever carries Election Day, the mix of short-and long-term economic problems hanging over America means the new president will walk into office with an enormous set of challenges on Jan. 20.