In this Atlantic Monthly article, Jack Beatty explains why the current state of the economy could mean trouble for Republican candidates:

"In short, either falling real incomes or rising unemployment strongly predicts defeat for the incumbent—that is, the president’s party in off-year elections. If the experts quoted in the Times are right, real personal incomes, which have fallen since 2001, will fall this year—that’s what inflation means. If, to moderate inflation, the Fed raises interest rates to slow the economy, then unemployment will rise. Both are likely to rise together, if Gordon is right, between now and 2008. Thus, if history is any guide, economic retrospective voting should cost the Republicans the House this year and the presidency in 2008."