American voters have punished Barack Obama over the slow pace of the economic recovery. Last Tuesday they handed back control of the House of Representatives to the Republican Party, severely reduced the Democratic majority in the Senate and elected a number of new Republican governors.

Not since 1938, when Franklin Roosevelt was in office, has the party that controlled the White House lost so many seats in the House of Representatives. The Democrats lost 61 House seats, 11 more than Bill Clinton lost in the 1994 Republican victory, as well as at least five Senate seats.

The swing to the Republicans saw a number of Democratic establishment figures lose their seats, such as John Spratt, chairman of the House budget committee, who was defeated after representing his South Carolina district for 28 years, and three-term Senator Russ Feingold from Wisconsin, who was one of the most ardent supporters of Obama’s liberal agenda.

The Republicans further consolidated their hold in the south, which has consistently deserted the Democrats and secured important victories in key gubernatorial races – which is particularly worrying for Obama.

Republicans now control 33 of out 50 governorships and this gives them a huge advantage as the individual states are responsible for redrawing the electoral boundaries – due next year – for seats in the US House of Representatives.

Furthermore, Obama now has to deal with hostile governors in a number of swing states which play such a crucial role in the presidential election, such as Ohio and Florida.

The results were not all bad for Obama. The Democrats kept a majority in the Senate, Senate majority leader Harry Reid was re-elected in Nevada, they won the gubernatorial race in California – the country’s most populous state, and a number of Republican candidates affiliated to the Tea Party – the populist conservative movement – were not elected.

Opinion polls show that the economy was the number one issue in these mid-term elections and that Democrats lost ground among women, independent and Catholic voters, the majority of whom voted for Obama in the 2008 presidential election.

So where does Obama go from here? The President has to deal with a Republican-controlled House of Representatives and a new Speaker, John Boehner, a conservative Republican congressman from Ohio who is set to replace the liberal Nancy Pelosi. Boehner has vowed to repeal Obama’s healthcare legislation, reduce the size of the federal budget and alter the way Congress is run.

Obama assumed responsibility for his party’s losses and for his administration’s lack of progress on the economy, saying he had no doubt this was voters’ number one concern. Obama has asked the Republicans to work with him on new initiatives to create jobs and invited the Republican leadership to meet him at the White House later this month.

Will the President be able to work with the Republicans? He will have to, but of course we can also expect an amount of gridlock. The Republicans now control the legislative agenda in the House of Representatives, which means they can pass or repeal any laws they want. However, such legislation will also need the approval of the Senate, which is still controlled by the Democrats, and also has to be approved by the President, who can veto any legislation he does not approve of.

It is clear that Obama interprets this election result as a protest over the economy. Therefore, he is unlikely to accept any repeal of his healthcare legislation, unless perhaps there is some fine-tuning to make the system fairer on the middle classes, who have seen their healthcare premiums increase.

Mid-term losses for the President’s party are common in America and such a result in no way implies that Obama will not get re-elected in two years time. Both Ronald Reagan and Bill Clinton saw their party lose seats in their first mid-term election, yet both were re-elected to the presidency.

What Obama needs to do, besides concentrating more on the economy, is to shake off his image of being excessively liberal, which annoys American voters. In 1994, Bill Clinton adopted more of a centrist political platform, which secured his re-election. Obama could, for example, explain to voters and Congress just how he intends to reduce the huge federal budget deficit over the next few years, something he has been somewhat vague about.

In a way, Obama is lucky he had to preside over a poor economic climate in the first two years of his presidency, as if the economy starts to improve he has a good chance of re-election in 2012. Presidents Jimmy Carter and George H. Bush, for example, were both defeated after the economy plummeted towards the end of their presidency. Furthermore, the Tea Party movement, which now has a strong foothold within the Republican Party can turn out to be an embarrassment for the Republicans because of its populism and lack of clear vision.

So I don’t think we can write off Obama just yet and still believe he can win the next presidential election, as long as he adapts well to the new political climate and as long as the economy improves.