Analysis: Bin Laden's death boosts Obama

President Barack Obama smiles as he greets members of the audience following a ceremony held to posthumously award Private First Class Anthony T. Kaho'ohanohano, U.S. Army, and Private First Class Henry Svehla, U.S. Army, the Medal of Honor for conspicuous gallantry at the White House, in Washington May 2, 2011.

WASHINGTON (Reuters) - Osama bin Laden's death gives President Barack Obama a huge boost as he faces low poll numbers but even that may not be enough to keep Americans' minds off economic troubles that could derail the Democratic president's 2012 re-election campaign.

In a boost to Obama, whose approval rating has been stuck below 50 percent, crowds gathered outside the White House and at the site of the World Trade Center to cheer and chant, "U.S.A., U.S.A." and "Yes we can" -- his 2008 election slogan -- well into the night.

Even some of his harshest Republican critics praised Obama -- and his Republican predecessor George W. Bush -- for their efforts against the mastermind of the September 11, 2001, attacks.

"It's an obvious net-plus. And it will be a good week for Obama," said Christopher Arterton, a professor of political management at George Washington University. "And then probably next week we'll be back to the deficit and budget crisis and then things will move on."

Killing the al Qaeda leader will go far in overcoming Republicans' contention that Obama, like any Democrat, is weak on national security issues. He had been repeatedly charged with indecisiveness as Washington struggled to react to this year's "Arab Spring" uprisings in Tunisia, Egypt, Libya and elsewhere in the Middle East and North Africa.

Feelings of patriotism after the 2001 attacks helped keep Bush in office when he sought re-election in 2004 and bin Laden's death could similarly boost Obama, even though voters do not go to the polls until November 2012.

"A year and a half is a lifetime in politics, but I think this really does boost his foreign policy credentials," Arterton said.

News of bin Laden's killing by U.S. special forces also reassured global investors, who sent the dollar higher, boosted stock prices and pushed down crude oil prices on Monday.

Prediction market InTrade, which allows people to bet on the outcome of events, showed Obama's re-election chances soaring after news of bin Laden's death.

An online poll of readers of reuters.com on Monday showed that 79 percent felt the United States made the right decision to kill bin Laden. Forty-two percent said it made them feel either more favorable or much more favorable about Obama's leadership.

Voters' economic concerns have been suppressing Obama's approval ratings, weeks after he formally launched a re-election bid in which he is so far the favorite against a weak, unsettled Republican field.

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Americans have been particularly frustrated as gasoline prices exceed $4 per gallon. A Washington Post-ABC News poll last week showed 71 percent felt gas prices were causing them financial hardship and 57 percent disapproved of how Obama was handling the economy.

Economists polled by Reuters expect monthly unemployment figures to be released on Friday -- a key indicator that could sway support for Obama -- will remain steady at 8.8 percent for April.

"It's too soon to say really but I think what we'll see is a rally effect, that his approval ratings will bump up and particularly on foreign policy. But it will be a relatively short-term blip," said Andy Smith, a political science professor at the University of New Hampshire.

"I think the economy has much more to do with the more recent decline in Obama's approval ratings," Smith said.

In rare praise, Senator Jim DeMint, a conservative Republican and Tea Party favorite who routinely rips Obama's fiscal policies, hailed the commander in chief and his troops for getting bin Laden.

Analysts said they expected the White House would avoid appearing too triumphant and risk alienating allies in the Muslim world, particularly as Washington seeks to leave Iraq and support Libyan rebels.

Obama also will face calls to drastically scale back U.S. involvement in Afghanistan, after more than nine years of war that has cost billions of dollars and killed 1,550 U.S. soldiers.

"What you're going to hear from both the president's allies on the left and even from the Tea Party on the right is Afghanistan is too costly in both blood and treasure and now it's time to start going home," said Matt Bennett, vice president at the Third Way think tank in Washington.

"Pushing back on that idea is going to be tricky."

(Additional reporting by Steve Holland and Thomas Ferraro; editing by Alistair Bell and Bill Trott)

(This story was corrected in paragraph 18 to change name to Matt Bennett)