By Steve Schifferes
BBC News Online economics reporter
The US economy has had a rocky ride since President Bush took office in 2001 - but it may be coming right just in time for his re-election campaign.
The US economy affects the whole world
The US economy is the largest in the world, with a gross domestic product of over $10 trillion - one quarter of the world's total.
But it has suffered from uneven growth in the past few years.
After an unprecedented period of expansion during the 1990s, the economy ground to halt just as the 2000 election was taking place.
The mild recession of 2001 was exacerbated by the terrorist attacks in September, which temporarily dented business and consumer confidence.
That in turn boosted unemployment, which reached 6% of the workforce by early 2003.
The Democrats had hoped to make the economy, and the jobless recovery, the central issue of the 2004 presidential campaign.
But by the end of 2003, the economy appeared to be back on track, with an annualised growth rate of 8.2% and falling unemployment.
The jobless recovery has been caused not only by the economic slowdown, but also by the rapid growth of productivity, which means that firms can produce more goods without having to hire more workers.
The remarkable growth of productivity, which seems to be growing by at least 2.5% annually - double the rate in Europe - will lead to higher real wages for US workers in the long run.
That high productivity has also helped keep inflation low and that in turn will encourage the US central bank, the Federal Reserve, to leave interest rates on hold at a 40-year low of 1%.
Low interest rates have also boosted the housing market, and encouraged people to re-mortgage their homes, releasing capital into the economy.
But consumers have borrowed heavily to boost consumption, and the debt overhang is another factor that has left the Fed reluctant to increase interest rates.
However, the good economic news has yet to filter down to the voters.
President Bush's approval ratings for his handling of the economy have been consistently lower than his overall poll ratings - but they are improving.
Recent polls by the New York Times/CBS News suggest that while only 37% approved of Mr Bush's economic record in late September, nearly half (49%) did so by mid-December 2003.
And over half (55%) now think that the economy is in "good" or "fairly good" shape. Meanwhile, nearly 40% think it is getting better - double the number earlier in the year.
The economy continues to be the top issue that voters are interested in, with 25% saying they think the presidential candidates should talk about jobs and the economy, compared to 14% who consider Medicare and health issues important, and only 7% the war or Iraq.
However, from a personal point of view economic confidence remains fragile.
This may partly be due to the fact that wages and salaries are growing more slowly in the recovery than corporate profits.
It may also be the lagging effects of unemployment, with the Democrats still able to claim that Mr Bush will be the first president since Herbert Hoover to leave office with fewer people in work than when he came into power.
Unemployment is not as high as when the first President Bush was defeated by the upstart Bill Clinton in 1992, nor as high as when President Ronald Reagan won a second term in 1984.
But particularly in the "Rust Belt" states like Michigan, Ohio, Illinois and Pennsylvania, with their highly unionised workforces in manufacturing, unemployment is a key issue.
Many of these workers tend to blame cheap imports from the Far East for their plight.
With the US trade deficit approaching a record $500bn, there have been increasing calls for more protectionist measures - particularly against China, which alone accounts for more than a quarter of the trade gap.
Many of the Democratic hopefuls for president have endorsed such demands, and want new protection for workers and the environment included in any new trade deals.
Mr Bush has been steering a difficult course, agreeing to trade sanctions against steel and textiles imports while maintaining his position in favour of free trade.
However, neither of the major world trade negotiations he has endorsed - the Doha round of trade talks and the Free Trade Area of the Americas, the centrepiece of his foreign policy in his first year in office - are likely to come to fruition before the election.
Instead, it could be the opening up of the world clothing and textile market to full competition on 31 December 2004, which has already been agreed in the last round of trade talks, that proves the focus of the election campaign.
But trade is not an issue that galvanizes US public opinion, and views are very mixed.
In a survey of public opinion over NAFTA, the free trade agreement between the US, Canada, and Mexico that is 10 years old in December 2003, American Enterprise Institute fellow Karlyn Bowman found that almost half of those interviewed had no opinion of its impact.
A further quarter were not sure whether it had created or lost jobs for US workers.
Americans seem to both believe that free trade is good for the US economy, and fear that it causes the loss of good jobs.
But in recent polls only 12% wanted to pull out of NAFTA, while just 15% said their jobs were threatened by foreign imports.
Dollar under pressure
It may well be that international foreign exchange dealers, rather than steelworkers in Pennsylvania, will ultimately play a bigger role in determining the direction of the US economy.
The Bush administration has adopted a posture of benign neglect to the accelerating decline of the US dollar on international currency markets, which has fallen by 30% against the euro in 2003.
The fall of the dollar has helped make manufacturing exports in those Rust Belt states cheaper and imports more expensive, contributing as much as Mr Bush's now-abandoned tariffs to protecting the steel industry.
In the long run the fall in the dollar should lead to more exports and fewer imports into the US, adjusting the trade balance.
But that could take several years, and meanwhile a runaway fall in the dollar could have unforeseen consequences for world financial markets.
The growing Federal budget deficit, as well as the growing trade gap, are increasingly seen as unsustainable by foreign investors, who are therefore increasingly reluctant to invest in the US and finance the gap.
Whoever becomes the next President will have to address these problems early in his term of office.