The Democratic polling firm Democracy Corps is out with a new comprehensive polling report looking at the state of the economy and impact on politics.

The good news for Democrats is that the poll found Republicans have squandered most of the advantage they had in 2010. Since January the percentage of Americans who disapprove of House Republicans job performance has surged from 48 to 59 percent. Democrats now also lead Republicans in the generic ballot 46 to 45.

The really bad news for the Obama administration though is that Americans don’t think the economy is improving. They in fact feel their own and their family’s economic problems have gotten much worse lately.

Since the spring of 2009, two-thirds of the country have rated the state of the economy’  negatively.  That is an unchanging backdrop to life in America right now.  What is going on?

Try reality.  Our tracking on people‘s own and immediate family experience shows a stable 35  percent who have lost a job in the last year and shows a worsening situation on health care, foreclosure, and particularly reduced wages and benefits.  That is particularly true for white non-college and working class voters.

The polling falling mirrors what we are also seeing in the official data with dropping home prices and bad job reports.

As far as regular voters are concerned there is no recovery and according to Democracy Corps, Democrats need to acknowledge this reality to win in 2012. President Obama needs to stop taking credit for “fixing the problem” simply because most people don’t think it has been fixed.

The White House metaphor of getting the car out of the ditch on to level ground and not giving the car back to the guys who drove it into the ditch was unconvincing, too light-hearted, backward looking, and out-of-touch.   People thought they were still in the ditch.

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This report shows that Democrats can win in 2012 if they focus on the new tough economic realities, offer a way to a better future, and show how different the choices are that progressives and conservatives will make.  Paradoxically, Democrats must forget the past and the financial crisis. That is counter-intuitive and painful because conservative policies were so destructive and Democrats did correct and brave things.  Voters understand this more than you appreciate, but that is at least three years ago now, and voters think a focus on that misses the country‘s urgent current reality.

The economy‘ is not the recovery, but a set of powerful on-going realities: a middle class smashed and struggling, American jobs being lost, the country and people in debt, and the nexus of big money and power that leaves common people excluded.

If Democrats get it and embrace that reality is their mission, there is potential for immense dividends.  As we will see, voters are desperate for leaders who understand the scope of what is happening to them, the middle class and America.  They want serious plans, not triumphalism  about jobs reports.

Of course for this strategy to work would require Obama to admit he has made mistakes and fallen short of his goals. That is not something that comes easy to most politicians.