The 'good news-bad news' scenario for the Dems in November
Back then, going into the November 2006 elections, the economy ended twelve months of gaining monthly almost 200,000 jobs; the Unemployment Rate was at a mere 4.5%; the three equity markets (DJIA, S&P, and Nasdaq) each gained 15 percent-plus in the twelve months ending November 1, 2006; the national average of a regular gallon gas in late October 2006 was $2.21; and the federal budget deficit of the previous fiscal year (2006) was $248 billion, which was almost half the size of the largest deficit that the 12-year Republican Congress ever produced. Despite all these positive numbers, Republicans lost thirty seats in the House, and six in the Senate.
Fast forward to the 2010 Midterms: The Private Sector economy lost on average 37,000 jobs in the twelve months ending/including June; the Unemployment Rate is at 9.5%; the equity indexes - while up year-over-year going into the July 4, 2010 weekend - are down for the last six months; gas prices are hovering close to $3 a gallon; and we are now in a federal deficit three times larger than the smallest Democrat Congress Deficit (FY 2008, $455 Billion), which was larger than any annual deficit that the Republican Congress gave us (FY 2004, $412).
Just as good economic news in 2006 didn't translate into Republican Congress gains; the current weak economic numbers will not necessarily mean spectacular losses for the Dems. This is the good news for the Dems.
The bad news for the Democrats however is that if Republicans get their PR act together by contrasting how the economy was when they last had Congress versus how bad things are when the Dems have larger control of Congress, few sane people will vote for a Dem in November.