The Iraq war, once the key issue in the U.S. presidential election, is taking a back seat to the economy as voters fret over a possible recession and consider the improving security situation in Baghdad.

Polls in Iowa, the state that kicked off the process for choosing a president on Thursday, showed people pushing the war lower on their list of concerns after the surge in U.S. troops helped calm conditions in the country and a deteriorating economic situation at home drew focus to domestic woes.

The entrance polls in Iowa certainly suggested that Iraq has receded ... as the central issue in the campaign, partly because the 'surge' is working and fatalities are down, and partly because the economy is getting worse, said David Gergen, a former adviser to Republican and Democratic presidents.

The latest numbers on jobs that came out (on Friday) ... are being interpreted by investors as yet another sign we may be heading toward a recession, he told Reuters.

But political analysts said who benefits most could be a toss-up, with out-of-power Democrats possibly helped by a poor economy, and Republicans may be given a boost from improvements in Iraq.

Barack Obama, an Illinois senator who would be the first black U.S. president, won the Democratic contest in Iowa. Mike Huckabee, former Arkansas governor and an ordained Baptist minister, garnered the most support from Republican voters. Both upset the front-runners in their parties.

Those victories came a night before a report revealed the weakest U.S. jobs growth since August 2003, putting the economy center stage in the campaign.

Voters across the country have indicated a shift in their concerns and what they believe presidential candidates can do about them.

The Iraq war made me sick, but that's beyond my capacity. The economy I can do something about, said Zewge Tegegnework, 70, an independent voter in Cincinnati who leans toward voting Democratic.

I'm worried about the economy slowing down, people losing Social Security, he said.

LESS COVERAGE, DIFFERENT ISSUES

Worsening economic conditions are not the only factor that has drawn attention away from the war. The decline in deaths among U.S. troops led to less media coverage of the Iraq issue, shifting the debate to issues such as health care, the subprime housing crisis and immigration.

At this moment in time, the daily accounts (of the war) have subsided, the daily concern over 'Is the situation getting worse?' has eased off, and people are beginning to think about things closer to home, said Tom Rosenstiel, director of the Project for Excellence in Journalism at the Pew Research Center, which tracks media coverage of the war.

So what does that mean for candidates?

It means that domestic issues, from what we can tell today, are likely to play a relatively greater role in determining votes, said Whit Ayres, a Republican pollster who argued Iraq's diminishing role in the election would be positive for Republican candidates.

Anything that drives Iraq down the agenda helps Republicans because a majority of Americans think it was a mistake to have gone into Iraq in the first place, and there's very little that Republicans can say at this point to persuade people otherwise, he said.

Gergen said the focus on the economy would help Democrats by taking away the Republicans' claim to strong economic stewardship under President George W. Bush.

Whether the economy slumps or not, Iraq is not going away. Obama generates thunderous applause when he tells audiences he aims to bring troops home within 16 months if he wins the White House.

Once the nominees are chosen, the Iraq issue is likely to return to the forefront, analysts said.

The conversation will change once we have nominees and the issues then sharpen up, Gergen said. It's (Iraq) going to be a very sharp issue of division between the two parties.

(Additional reporting by Andrea Hopkins; Editing by Jackie Frank)

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