Watch the Economy react to the November election.

You can fool all of the people some of the time ... (fill in the rest for yourself.)

Bush approval has fallen to 36% according to ARG (American research Group.)

Why has Bush fallen back to record lows? Here is a hint:

A total of 14% of Americans say the national economy is getting better, which is down from 30% in December and 52% say the national economy is getting worse, which is up from 40% in December. When asked about the national economy a year from now, 15% say it will be better, which is down from 28% in December, and 62% say it will be worse, which is up from 39% in December.

The anticipated economy more than the ecurrent one is key to such very low approval ratings for Bush, but it won't effect only Bush. This has to really concern the Congressional Republicans, especially those running for Congress in November.

Expect the Federal Reserve to start lowering interest rates again to influence the election, and they'll have to do it soon. (This prediction is based on my belief that the Federal Reserve prefers to see Republicans elected to Congress and the Presidency.)

The timing of such rate lowering must allow for the delay between the time lowered rates are announced and the time the results of the announcement begins to actually effect the economy. Lowered rates in March will start improving housing starts and real estate sales over the Summer when people move to avoid forcing their children to change schools in the middle of a schooly year. If the rate change is any later than March the delays between getting a home loan and actually moving will be too late to hit the Summer deadline. After August economic improvement will be too late to convince voters that the economy has really changed by the election in early November.

Since the most recent increases of interest rates by the Fed have been a minimal quarter percent each month, I would expect them to reduce rates by a half percentage point in March. Rate increases were minimal but regular in order to not spook the real estate and bond markets. The decrease will be intended to surprise those markets favorably, so I think that a half-percent decrease is likely.

If the Fed decides to stay neutral for the November 2006 election then this will not occur. I don't think the Fed has been neutral since Greenspan took over, and now that he is leaving nothing changes that.