updated 5/19/2004 3:59:24 PM ET 2004-05-19T19:59:24

The U.S. economy’s solid rebound should be a campaign plus for President Bush but the good news is being drowned out by the drumbeat of scandal from Iraq, analysts say.

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Bush’s approval ratings have hit the lowest levels of his presidency despite a spate of economic data showing robust growth and a sharp increase in job creation, factors that would normally play to an incumbent president’s benefit.

The rosy economic news has had to share billing with events half-a-world away in Iraq that are eroding the president’s standing less than six months before he faces re-election, even though many voters say the economy is their top concern.

Pulitzer prize-winning cartoonist Matt Davies put it in pictures with Bush sitting in a dark cell of Iraq news as sunlight, representing economic news, streams through a barred window. “This is torture,” the despondent Bush thinks.

“It’s a little bit like having a toothache,” Pew Research Center Director Andrew Kohut said of the public’s focus on Iraq. “No matter how well things are going in other realms, you still have that toothache and that’s all you think about.”

Tensions in the Middle East are hitting home as well, by helping push up gasoline prices to record highs. Retailer Wal-Mart said last week rising energy costs have stripped $7 a week from the pockets of its average customer.

In the economic realm, things are clearly looking up. The U.S. economy has just turned in its strongest four quarters of growth in 20 years and decisive payroll gains have finally laid to rest the recovery’s “jobless” label.

Poor marks on handling economy, too
But not only have Bush’s overall approval ratings fallen, Americans’ rating of his handling the economy is in the dumps. A Wall Street Journal/NBC News poll last week found six in 10 Americans say the economy is heading for trouble.

Democratic pollster Peter Hart, who helped conduct the poll, said Americans seemed to be growing more worried about the economy as a whole and less about themselves. “The old ‘me’ economy is moving to the ‘we’ economy,” he said.

Ruy Teixeira of the Center for American Progress, a liberal policy research group, said Americans by-and-large have yet to feel the rising economic tide, despite the economy’s 4.9 percent growth over the past four quarters and the creation of 625,000 jobs in the past two months.

“People don’t judge the economy on the basis of monthly releases of government statistics. They judge it based on how they’re feeling it on the ground,” he said.

Teixeira said Americans remain concerned about pocket-book issues, such as weak wage growth and deteriorating benefits, and said those worries need to ease for the president to get a big electoral boost from the economy.

Bush’s Democratic challenger, Sen. John Kerry, has tried his best to capitalize on these issues, part of what his aides call “the middle-class squeeze” — a “squeeze” exacerbated by the recent increase in gasoline prices to record highs.

'They're feeling it at the gas pump'
“People feel that this is all precarious, and they’re feeling it at the gas pump,” said Curtis Gans, head of the nonpartisan Committee for the Study of the American Electorate.

A Pew poll last week put Bush’s approval rating on economic issues at just 38 percent, a level Kohut said spells trouble for the president’s re-election hopes.

He said that even if it were to rise, Bush would need “a little less noise out of Iraq” to enjoy the benefit.

Greg Valliere, an analyst at Schwab Soundview Capital Markets, said he sees the economy turning to Bush’s benefit.

Still, he said it may not prove enough to overcome negatives from Iraq, particularly if the June 30 handover of sovereignty to an interim Iraqi government does not go well.

“Iraq is the bigger story. That’s the great X factor,” Valliere said.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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