This year’s election cycle is in a very precarious phase, as this past week signaled yet another issue transition for the 2008 election year.

The Wall Street (banks, lenders, insurers) breakdown, blowout, bailout and rally provided a tumultuous week for the presidential and congressional campaigns as Americans watched in disbelief and anxious anticipation of what it all means for main street.

With the fallout still remaining to be seen, one thing is clear, the ECONOMY is now the issue du jour.

Renowned pollster and strategist, Arthur Finkelstein put it best, “Politics is a three dimensional chess game.  We make a move.  They make a move. Then the hand of God sweeps in.”

However, unlike most election cycles in modern history, this one has witnessed the so-called hand of God several times, in the form of issue dominance.  The economy’s new role, as the most important issue in the minds of voters, mark’s the fourth change of this cycle.

Here’s the rundown.

First, it was THE WAR IN IRAQ, with General Petreaus’ testimony and opposing arguments on the troop surge, dominating the media and the political environment around this time last year.

Then, the fight over illegal IMMIGRATION took hold the early part of this year, with hot debate over amnesty playing a larger role in the Republican presidential primaries.

As the summer began, American’s became increasingly concerned over the rapidly rising cost in gas and fuel prices.  The ENERGY CRISIS further arrested attention with many gas stations selling over four dollars-a-gallon gas, sparking the ensuing debate over increasing domestic and off-shore drilling to ease U.S. reliance on foreign oil producers.

Now, the ECONOMY is thrusted into the front and center position on the minds of voters as we soak in the brutal hangover from lenders and banks’ high risk mortgage lending.

What’s more interesting, is while each of these issues became the focus, we continued to witness a constant sharp disapproval by voters of the administration and the congress.  Each one of these issues reinforced Amricans’ general sense of failure, despair and frustration at the hands of the leadership in Washington.

The emotion started off as anger and indignation and it now appears to be more in line with hopelessness and helplessness.  If the spike in Wall Street investment at the close of last week is merely a fleeting knee-jerk attempt to make gains in a low tide and the banks continue to fold, we will see more voter and consumer anxiety.

A continuation of such large scale institutional market failure could lead the economy into something very dark for Americans, and possibly changing the national psyche from expansionism to protectionism. 

All this remains to be seen as we closely watch the market react to the large scale bailout being proposed by the President and the investment rallying we saw late last week. So political candidates are on somewhat shaky ground when it comes to economic messaging.

Political strategists know, messaging on the most important issues while tapping into the general emotion driving these issues is key.  That’s why this election cycle has forced top-down dramatic messaging and advertising changes.  Energy spots and mail must be quickly replaced with economic message pieces.  Polls taken before last weekend should be tossed and new polls, gauging issue relevance, are held relevant until other new dramatic changes in the economy and the world affect the American people.

So for candidates trying to win in this election year, in competitive races, higher demands are placed on their teams and consultants to navigate this winding road.  Because you never know what new issue may be around the next corner. 

As reported by Joshua Chaffin in the Financial Times and picked up by Drudge Report, advertisers and marketers appear to have a recession all to our own.  According to Chaffin:

Advertising weakness is spreading from newspaper and radio groups to the rest of the media and casting a shadow over a year that was supposed to benefit from the Beijing Olympics and a high-spending election season, analysts warn.

The biggest threat to the industry from big advertisers such as car dealers, banks, retailers and airlines, among others, as they tighten their belts.

However, the quote in the story that struck me most came from LARRY HAVERTY, portfolio manager at GAMCO Investors,

What we’ve got here is a recession in advertising. It started in local media – radio and newspapers – and is now spreading to TV.

With dramatic alarmist talk aside, it’s important to understand that advertising is always going to take some type of hit when an economy weakens.  Banks and car companies usually look to make sure salaries are paid and other expenses are taken care of in a time when profits margins thin.  This movement of resources normally results in a slashed marketing budget. 

Calling this a recession in advertising is an eye grabber, but it’s wholly not accurate – a recession is a recession period, and it hits everyone.  Marketers normally don’t feel a separate recession from the one that already exists in the economy at large.

With that said, I do point out that Chaffin does address an important issue – the digital effect on traditional media.  While the contributors to the story claim digital’s impact is minor, and I don’t disagree, I do believe that recessions and economic shakeups tend to have a re-aligning effect on a lot of industries.

The one very important thing associated with recessions are natural market corrections and re-alignments in major industries.  In advertising, slashed budgets and big shakeups will hopefully cause many to think differently about ad campaigns.  Perhaps, we will see smarter campaigns that encompass alternative methods and channels for delivery.  That’s OK.  It makes an industry healthier and stronger when it’s forced to survive and be successful.

Hopefully, a new era in advertising, which was born in the tech bubble, will be pushed forward out of this potential re-alignment.  

US political marketers and advertisers know this concept very well.  We look to the large multimillion dollar corporate budgets with awe.  We also laugh when we see the same budgets spent so poorly.  Political advertisers learned a long time ago how to advertise and market smartly and effectively on shoe-string budgets.  It will be fun to see the corporate world operate in a pinch.