From Obama’s point of view, things actually look pretty good. While he could hope for a better economy, he can draw comfort from polls showing that most people still primarily blame George W. Bush’s policies. Polls also show support for a jobs program and higher taxes on the rich. At the end of the day, Obama can depend on a unified Democratic Party and positions on the issues that are far more attractive to moderates and independents than those of the Republicans.
I think Obama will also benefit from a fractured GOP that has spent too much time pandering to Tea Party extremists for the last three years, which has put it out of touch with moderates, independents and non-Tea Party Republicans. Moreover, whoever wins the GOP nomination is either going to be widely disliked by many Republicans (Romney) or carrying so much ideological baggage they will be sitting ducks for Democratic attacks (all the rest). This being the case, it makes sense for Obama to sit tight and keep doing what he is doing. With a little bit of luck and even a modest upturn in the economy, I think he could win in a landslide.