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updated 5/26/2004 12:58:18 PM ET 2004-05-26T16:58:18

"What a difference a year makes," U.S. Treasury Secretary John W. Snow exalted yesterday. "A year ago at this time, the talk was of deflation. The recovery was under way, but the commentators all said it was wobbly and anemic and weak and fragile, and then you got the tax cuts. What those tax cuts did was to put oxygen in the economy."

Yep, a year sure makes a difference. As Snow points out, the U.S. economy is now growing at an impressive pace, and the recovery has belatedly begun generating new jobs — 625,000 in March and April alone. A year ago, such good news surely would have swayed voters. But with gas climbing past $2 a gallon and the situation in Iraq deteriorating, the public seems less than impressed by the economy's strength.

For example, in a Washington Post/ABC News poll taken late last week, 54 percent of adults disapproved of President George W. Bush's handling of the economy, and 57 percent said he didn't understand the problems of people like them — the sort of perception that hurt his father's reelection bid. Back in April 2003, when there were 1 million fewer jobs, only 45 percent of those polled disapproved of Bush's economic leadership, and 48 percent thought he was out of touch. Investors seem equally leery; this month, the UBS/Gallup Index of Investor Optimism is at its lowest since October, with 70 percent of respondents saying energy prices are hurting the investment climate "a lot."

This has left Bush Administration officials in the awkward position of trying to tout what they consider an underappreciated and underreported recovery, while assuring voters they feel their pain. Yesterday, Snow and Commerce Secretary Donald L. Evans called in economic journalists to try to get that message across.

"It's tough to break through the negative news that shows up on the front page of the paper or shows up on the TV screen at night. We've got a lot of good news to tell the American people,'' said Evans.

Snow brushed off the negative polls and pointed to strong consumer and businesses spending as tangible signs of confidence in the economy. "There's a marketplace poll every day,'' he said. But he added later: "Higher gas prices are creating a financial hardship for millions and millions of Americans. We know that. And those higher gas prices in a way are becoming a proxy, unfortunately, for how they feel about the economy."

So how will voters feel about the economy come November? If you think you know, then Lehman Brothers has some investment ideas for you. It has identified distinct portfolios of stocks that should benefit from either Bush's reelection or the election of the Democrats' presumptive nominee, Sen. John Kerry of Massachusetts.

Given Kerry's fondness for stricter auto emission standards and unions, General Motors belongs in the Bush but not the Kerry portfolio, Lehman says. And the Democratic Party's concern for affordable housing means Fannie Mae and Freddie Mac should be overweighted in the Kerry portfolio.

As for retailing stocks, a Kerry win would mean higher marginal tax rates on the wealthy, who will then have less left to spend at high-end retailers. So if you think Bush will win, Lehman advises, buy Tiffany. And if you're betting on Kerry, put your money in Kohl's.

© 2012 Forbes.com

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