WASHINGTON — As President Bush spoke about the state of the nation's economy recently in the century-old Grand theater in New Albany, Ind., his words were as cheery as the vaudeville acts that once played there.
But the storyline beyond the stage is closer to film noir.
Gasoline? More than $3 a gallon in most of the country, up more than 85 cents from a year ago. Housing prices? Falling. Mortgage payments? On the rise. Financial markets? Up, down, up, down. The dollar? Down. Way down.
The president acknowledged the economic woes, calling them "serious challenges." But, he pointed out that the nation's job growth was on a record-setting 50-month run, unemployment was "a low 4.7%" and in the third quarter the economy grew at "a vigorous rate of 3.9%." He spoke of "economic vitality" and the 8.3 million jobs created by "American entrepreneurs and dreamers and doers."
"This economy of ours is resilient. And that's important for the American people to understand," Bush said, bright words on a dreary day in an aging Indiana suburb across the Ohio River from Louisville, Ky.
The message reflected the president's campaign to calm fears about the economy with a sunny outlook as the nation heads into the election year that could prove troubling to a Republican Party burdened with his unpopular leadership. In the last six weeks, he has made at least five speeches in which he talked up the economy.
But it is an increasingly difficult pitch for Bush: Polls show that Americans are growing more pessimistic about the economy, with more saying it is doing poorly than at any other time in the last five years. And the projections of private economists and the Federal Reserve Board suggest that pessimism is well-founded.
"Most presidents can't make silk purses out of sows' ears, and this president doesn't have a lot of credibility," said Allan H. Meltzer, a professor of political economy at Carnegie Mellon University's Tepper School of Business.
To some extent, he said, rating the economy "depends on whether you are looking forward or back."
"If you look back," which he said Bush is doing, "the economy has done very well." But, he said, "If you look forward, you see a lot of problems."
On Tuesday, the Fed looked forward. It said economic growth next year could be in the low range, between 1.8% and 2.5%.
Meltzer and other economists said the president's morale-boosting speeches were up against the realities that Americans encountered each day, which figures into perceptions of the economy along with the data and trends the president cites.
"They are influenced most by what they see," he said. They may find a 2% raise reflected in their paycheck, but what they see "at grocery stores and gas stations is chewing it up."
Tim Vercellotti, director of polling at Rutgers University's Eagleton Institute of Politics, said: "Hearing statements about . . . the robust nature of the economy is not as persuasive as what you hear in your social network: A neighbor losing a house, or a relative filing for unemployment. That resonates more. Or just buying gas these days."
National surveys show the economy is beginning to eclipse Iraq at the top of the list of potential voters' concerns in the 2008 presidential campaign. An Associated Press-Ipsos poll in October found that 15% cited the economy as the major problem facing the United States, six percentage points higher than in July, and 14% cited the war in Iraq, down three percentage points during that same period.
Also in October, a Los Angeles Times/Bloomberg poll found that 51% of those surveyed rated the economy as doing "badly," while 46% said it was doing "well." Not since February 2003 had more people in a Times poll said the economy was doing badly rather than well.
Kevin Sullivan, White House communications director, said that in discussing what Sullivan called "kitchen-table issues," Bush was careful to recognize the daily economic realities that Americans face and "to empathize with someone who is struggling with gas prices or college tuition." Similarly, the economic shocks of his presidency have become a Bush mantra: the bursting of the dot-com bubble, the Sept. 11 terrorist attacks, Enron and other corporate scandals and Hurricane Katrina. The ability of the nation's economy to overcome them, Bush argues, demonstrates its inherent strength.
And Bush's use of figures demonstrating economic growth or low unemployment, Sullivan said, strengthen the president's argument. "He's very credible on the economy because of his record," the White House aide said. "It's not just him saying, 'Trust me.' "
As for the home mortgage crisis, the president is expected to address it anew after Thanksgiving. In August, he announced a series of steps, some requiring congressional approval, to help homeowners avoid foreclosure.
Critics say that in addition to looking backward, Bush is cherry-picking economic statistics to find those that allow him to present an upbeat report.
Unemployment continues to hover below 5%, "but the quality of the jobs people have is deteriorating, the income gap is increasing, and there is more job insecurity," said Michael S. Lewis-Beck, a political economist at the University of Iowa.
At the same time, he said, inflation is low, but "is starting to heat up." The Consumer Price Index grew 3.5% in October over the previous October. And economic growth for 2007 is predicted to end up around 2% -- a sizable drop from the third quarter's 3.9% that Bush touts.
In the end, Lewis-Beck and others said, Bush risks his credibility on the economy by presenting a picture that does not mesh with people's experiences.
"When there's a blip, he'll take advantage of that," Lewis-Beck said.
"But people live in the world, so when the macro economy is not working, they feel that."