Democrats on Tuesday received a gift high on their wish list — an invigorated economy that they believe will give President Obama much-needed clout when he faces off with a Republican Congress next year.
Current and former Obama aides say they expect the White House to get a year-end boost from the 5 percent expansion rate of the economy in the third quarter, and expect the president to aggressively talk up the gains in the months to come.
"The proof is in the pudding," one former senior Obama administration official said. "There's really nothing else to say."
Democrats boasted about Tuesday’s figures, the highest growth rate in more than a decade and the latest good news for an economy that added more than 300,000 jobs last month. The Dow Jones industrial average cleared 18,000 for the first time in history barely an hour after the release of the economic numbers.
A variety of factors helped drive third-quarter growth that the Commerce Department originally pegged at 3.9 percent, including falling gas prices and a robust trade market.
But White House officials said gains in crucial areas like household spending and business investments played a big role in the economic boom between July and September.
A senior administration official said Tuesday that the president already had been offering a pretty optimistic take on the economy for the last year. But now, the official said, the White House had even better figures to bolster his case, including gas prices that have tumbled almost 50 cents a gallon in just the last month.
The economic news could also further embolden Obama, despite the Democrats’ losses at the polls in November. The president has already dropped strong hints that he won’t sign off on the Keystone XL oil sands pipeline, which Senate Republicans say will be their first priority in January.
Members of the GOP, normally quick to hit Obama for his handling of the economy, were noticeably quiet about what amounts to accelerated growth for at least half of 2014.
But Republicans, whose victories this year were at least partly driven by the economic unease felt by voters, also see themselves in a strong position for 2015.
Don Stewart, a spokesman for the incoming Senate majority leader, Mitch McConnellMitch McConnellPeter Thiel does not make the GOP pro-gay Reid: Trump is a 'hateful con man' McAuliffe: Clinton won't move TPP without changes MORE (R-Ky.), said the GOP was more than ready to work with Obama on legislation with potential for bipartisan agreement, including on infrastructure spending.
“But when he wants to raise taxes, add additional layers of red tape or drive uncertainty, he won’t have support,” Stewart said. “He’ll also have the chance to sign bipartisan jobs bills like Keystone next year.”
Both parties recognize that the economy still faces its fair share of challenges in 2015, not least the potential for the Federal Reserve to finally hike interest rates after waiting years for suitable growth numbers. Outside forces — such as a Russian economy expected by some to contract by more than 5 percent in 2015 — could also sap the economy’s growing strength.
“There is more work to be done to ensure that all Americans can share in the accelerating recovery,” Jason FurmanJason FurmanUS health spending rises to .2 trillion Jobs bounce back in June after terrible May Overnight Finance: Trump threatens NAFTA withdrawal | Senate poised for crucial Puerto Rico vote | Ryan calls for UK trade deal | Senate Dems block Zika funding deal MORE, the chairman of Obama’s Council of Economic Advisers, wrote on Tuesday.
Janet Yellen, the Federal Reserve chairwoman, has said she’s in no rush to raise interest rates. But Fed observers widely expect the board to make just such a move in 2015, in what will be the first increase in rates since the recession.
Higher interest rates from the Fed will boost the cost of borrowing and tap the brakes on the economy. Even so, Fed officials anticipate the economy will continue growing at a similar clip over the next few years, as the jobless rate falls and inflation gradually creeps to acceptable levels.
Recent polls suggest that voters who for years felt left behind by the economic recovery are starting to come around, after punishing Democrats on Election Day last month. A CNN poll released Tuesday found 51 percent of adults thought the economy was in good shape — the first majority to say so in more than seven years.
An NBC News/Wall Street Journal poll this month also found fewer people pessimistic about the economy, just weeks after exit polls said that 7 in 10 voters this year thought the economy was off the rails.
That increased optimism offers both challenges and opportunities for the parties leading into next year.
Democrats have long argued that they haven’t done a good job explaining their work on the economy to voters, to the point that Sen. Charles SchumerCharles SchumerConvention shows Democrats support fracking, activists on the fringe Dem ad blasts Indiana senate candidate on Social Security The Trail 2016: Unity at last MORE (D-N.Y.) said recently the party had made a mistake concentrating on healthcare in 2009.
"One challenge we've had has always been messaging," said the former senior administration official said. "We've had a series of economic wins but they've never been realized or appreciated by average Americans because they don't feel it."
Even though White House aides say Obama will tie the success of the economy to his legacy, they need to do a better job saying "the president and the administration has made this happen. Period."
But if voters are looking to hand out credit for an improving economy, history suggests they’re more likely to give it to Obama than a Republican Congress. That gives the GOP a challenge of its own ahead of the 2016 elections, where the economy will likely again play a central role.
Still, Republicans made it clear that there’s still plenty to criticize in an economy that was first knocked off its feet more than six years ago.
“Part of the challenge we face with the economy is that whenever we see good news, we see troubling news,” said Doug Heye, who was a top aide to former House Majority Leader Eric CantorEric CantorThree strategies to help Clinton build 'Team of Teams' David Brat may run for Senate if Kaine becomes VP The Hill's 12:30 Report MORE (R-Va.).
“More than 11 percent of Americans have left the workplace altogether, frustrated by long-term unemployment and giving up on President Obama’s most central promise — hope.”