There is some smart writing over at the Atlantic on the economy and the election:
On election night in 2008, I saw a bunch of people twittering some variant of “It’s 1932!” This also seems to have been what Democrats in Congress thought–they seem to have believed that they had near-FDR levels of political capital to work with. But as I said at the time, the relevant comparison was not 1932, but 1929. Financial crises take a while to work through, and this one may well see Obama leaving office after one term, many of his policies tainted by association with a recession he didn’t cause and couldn’t ever have done much about.
It is true that the economy is largely bigger than the government. However, government can mess up the efficiencies of the market by irrational legislation–like the auto bailout.
That said, AEI provides some hope for the Democrats in the midterms, and perhaps even for Obama himself. Voters do not always use the economy as an evaluative tool. It is but one tool of many. Read the whole thing.