AMERICAN POLITICIANS love Bruce Springsteen. They hear the patriotism in his songs but miss the cynicism, pick up on the hope and tune out the desperation. Most of all, they see his enduring popularity with white blue-collar workers and want in on the action. John Kerry chose No Surrender as his campaign theme song. Ronald Reagan famously used Born In The USA as walk-on music, unaware that it was a scathing commentary on the treatment of Vietnam veterans and the lack of economic opportunities in the country to which they returned.

This April, Springsteen endorsed Barack Obama. "A great American reclamation project needs to be undertaken," he wrote on his website. "I believe that Senator Obama is the best candidate to lead that project. He speaks to the America I've envisioned in my music for the past 35 years, a generous nation with a citizenry willing to tackle nuanced and complex problems, a country that's interested in its collective destiny and in the potential of its gathered spirit. A place where nobody crowds you, and nobody goes it alone'."

The last line is from Long Walk Home, a track on his latest album, Magic. It is a typical Springsteen lyric, about a town where the diner is "shuttered and boarded" and the veterans' hall stands "silent and alone" but where "everybody has a reason to begin again" and the "flag flying over the courthouse means certain things are set in stone".

Springsteen called John Kerry's losing battle with George Bush "the most important election of our lifetime" but the stakes are higher this time. Unemployment has grown for four consecutive months. Mortgages are failing at an alarming rate, house values are slipping precipitously. Oil is almost $140 a barrel.

Many analysts believe blue-collar workers will be the most important swing group in November, because their vote will determine who wins Ohio, Pennsylvania, Michigan and Minnesota. Who they trust to fix the economy will be critical, as they search for the coda of hope and determination to a song about hard times.

I slip Born To Run into the stereo of a Korean hire car, fill the tank with overpriced petrol and hit the New Jersey Turnpike.

Linden is a city at the eastern edge of the rust belt that once employed 50,000 people in manufacturing industry. It made General Motors cars and trucks, Singer sewing machines, Gordon's Gin, Dupont chemicals, General Aniline clothing dye and photographic film. Today, the Merck pharmaceuticals plant is all that's left. In the back room of the Lynwood Inn, Beatrice Bernzott has assembled a history of her home town. There are photographs of John D Rockefeller with his son at the Bayway Refinery, shots of Wildcat fighters built for the British navy by the Eastern Aircraft Division of GM and a can of Exxon Oil commemorating the company's Third Annual Safety Jamboree.

Bernzott has been collecting these industrial artefacts her whole adult life. When she talks about the way Linden used to be, she sounds nostalgic, but she can always produce evidence from her career as a newspaper reporter to back it up. "Linden was a great place to live and a great place to work," she says. "People came from Pennsylvania to work here because they were good jobs, they were union jobs. This was a place that had a thriving main drag, no empty stores. If they emptied, they were filled the next day."

General Motors had three shifts - two manufacturing, one maintenance - which meant three different lunch hours at the Lynwood Inn. "We were mobbed all the time," says the landlord, John Neshimka. "Those were the glory days. This town is sinking faster than the Titanic. It's got to get better because it's on the bottom right now." Everyone I speak to agrees that Linden has changed for the worse. Some blame the government, but mostly they blame corporations for shipping jobs overseas.

"The shoe industry went first," says Bernzott. "The glove industry was next, then the clothing. The American people were stupid. They were buying it from China, India because it was cheap, cutting their own throats." She is wearing a T-shirt made in Taiwan and doesn't like it one bit: "It's so hard to find American these days."

The closure of General Motors was a long, painful process. A plant that made Cadillacs, Buicks and Oldsmobiles was converted to produce the ill-fated Chevy Corsica, then Chevy Blazers and GMC Jimmys. The workforce was cut until only 800 of the factory's 5500 employees remained. All were members of the United Auto Workers union. When the assembly line finally stopped in 2004, the deal they had negotiated meant they kept on getting paid for another three years.

Driving round the former GM site with Bernzott, we pass the parking lot that was only open to American-made cars. We see cranes and diggers shepherding huge piles of scrap and wire. The cranes are made in Wisconsin and Pennsylvania, for now. Their manufacturer, Manitowoc, has just started production at a new factory in Zhangjiagang, China.

"The whole fault of our economy has to do with greedy corporations," Bernzott says. "We had a magnificent workforce and a great product but, as much profits as we made, it wasn't enough. Take a look at what the executives get in money and benefits, and you're ready to shoot someone."

ThE union hall in Linden was sold off soon after the plant closed. These days, the UAW Local 595 shares an office with the Local 980 in Edison, a few miles down the turnpike. Together, they represent the workers of two car plants that no longer exist. Ford's factory in Edison stopped making pick-up trucks five years ago. The president of the Linden branch, Guy Messina, spends his time straightening out retirement packages for his members and trying to diversify the UAW's membership into other professions. He's organising a rally in Atlantic City, aimed at incorporating 11,000 casino card-dealers.

"There is no blue-collar America," he says. "Everything is gone. They're moving to Mexico. Every day you hear about a small plant closing, like Westinghouse the refrigerator maker."

His T-shirt reads Johnstown, Pennsylvania, where he followed his father and his grandfather into the mill. The arrival of cheap steel from Spain and Japan in the late 1970s bankrupted the company. Workers lost their pensions and healthcare coverage. Messina is worried that Japanese and Korean imports will soon do the same to the American automobile industry.

"UAW members are scared to death about the companies surviving," he says. "They're scared that if the company goes bankrupt the same thing that happened to Bethlehem Steel will happen to them - that GM won't be able to meet its obligation in terms of retirement, or more importantly, healthcare."

American car manufacturers are in shock. Chrysler's sales were down 25% in May. As rising fuel prices finally start to affect the American appetite for oversized cars, gas-guzzler production in particular is under threat, at plants in Michigan, Texas, Ohio and Wisconsin; 19,000 of GM's 74,000 workers have signed up for buy-outs or early retirement offers.

Union carpenter Rocco Cerrato, who worked at the Linden plant, tells me: "They corporations do not want Americans any more. My sons and grandsons will never walk into a plant and leave their lunch pail there for 30 years. It's over. The industrial complex has been devastated - I'm a good American and a proud one - by the policies of our government."

This is a common response, critical of free trade policies, but couched in respectful, patriotic terms. Guy Messina blames Bill Clinton for introducing the North American Free Trade Agreement (Nafta), but still voted for Hillary. Harry O'Donnell tells me: "Every time a Republican gets into office, we get laid off. Every time a Democrat gets in, we work overtime like crazy."

Most of the people who live here have active roots in Europe. Messina and Cerrato are Italian-Americans. I meet Polish-Americans, German-Americans, Cuban-Americans. None of them likes the cheap labour flooding in across the southern border, but they are mostly close enough to the immigrant experience to characterise it as big business exploiting willing but vulnerable people.

Machinist Gregory Zacharczyk, from the International Brotherhood of Electrical Workers, tells me that when he graduated from high school in 1978 "it was all white people. They had the railroad tracks and the black people stayed on that side. Now they're coming over to this side more and more and more, which is understandable, because they're getting more money".

The Veterans Of Foreign Wars club, Post Number 1397, is for men and women who have served in the US armed forces and their guests. Tim, our photographer, orders a Heineken, so I choose a mug of Budweiser, thinking it's more culturally appropriate. I immediately feel like a fraud, like Obama in a blue-collar bar making sure he didn't drink "some designer beer". The total bill is $4.50. Later, Stevie the bartender says he "made a mistake" and gives me another mug for free.

The commander, Frank Matuszewski, sums up the prevailing attitude to welfare in this conservative Democrat town. "I don't expect nothing from the government. People that don't work, they shouldn't get spit. You'll always come out straight if you work hard in America."

Most of the vets at the bar tonight fought in Vietnam. All of them think invading Iraq was a mistake. Robert Butler, of the 569th General Supply Company, says: "I don't think we should be there. I would be in favour of taking the troops out as soon as possible. US navy veteran Dennis Costello, says: "Our president is trying to take revenge for his father."

The only dissenting voice comes from army reservist and commercial airline pilot Darrell Vigue, who is about to begin a seven-month tour flying planes in Iraq. "I think we need to stay there and finish the job," he says, adding that Obama is an appeaser and McCain is "the only man on the ticket".

Driving in on Route 66, Asbury Park appears to be a prosperous place. Houses are detached, in the classic clapboard style. The avenues are wide and lined with trees. It doesn't look like the 13th poorest district in New Jersey that the statistics say it is. That census was carried out eight years ago, at the beginning of a significant revival. It takes no account of the luxury apartment buildings rising by the beach, the strip of new restaurants, bars and shops on Cookman Avenue, or the refurbished bed and breakfast on the corner of 5th Avenue and Heck Street that used to be a crack house.

There's no escaping the impression that Asbury Park's grand project is half-finished. Few of the banners offering "waterfront living from $400K" are attached to much more than foundations and scaffolding. The peeling Wonder Bar sign, a replica of the Palace Amusements original that was torn down in 2004, looks out of place, the old city stubbornly coexisting with the new.

The corridors of the Berkeley Carteret hotel are empty. On this warm June weeknight, the boardwalk is deserted. A barmaid at TGI Friday's tells me "it gets packed at weekends, but the rest of the time it's like a ghost town".

The city has a history of corruption and scandal. Mayor Kenneth Saunders was sent to jail three years ago for attempting to bribe a member of the council. A predecessor, Dennis Buckley, resigned after he was busted buying cocaine in a pub across the street from the council offices. One administration built a sewage plant next to the beach, because it was cheaper to lay shorter pipes. The current council spent $9 million dealing with the smell.

This is where Springsteen formed the E Street Band. He named his debut album Greetings From Asbury Park, still rehearses here before every tour and contributes generously to local charities.

Terry Reidy, the City Manager, lives in a beautiful old house on 4th Avenue. Window stickers for the American Civil Liberties Union and impeachbush.org betray his political allegiance. "Corrupt politicians have really hurt this little city," he says. Gradually, by surrounding himself with young, ambitious professionals, he is changing that reputation.

Police chief Mark Kinmon cites last year's crime statistics, the lowest for a decade, as vindication of his approach, which combines a more visible police presence with better outreach and education programmes in the poorest communities.

"A lot of people still have the perception that Asbury Park is not a safe place," Kinmon says. "A lot of people still believe it's a town that's out of control, that it's a violent place, and that's just not true. There are very few random acts of crime against unknown victims."

Reading between the lines, this means violent crime is largely confined to the African-American quarter around Springwood Avenue, the same neighbourhood that burned to the ground on July 4, 1970, in riots which cursed the city with a bad reputation that endures. Earlier this month in Asbury Park, police arrested 96 people in one week, many of them members of the Bloods or Crips street gangs. A murder case was resolved with the jailing of 21‑year‑old Shawn Johnson, who shot a teenage rival in the head four times in broad daylight.

Reidy and Kinmon both believe in the possibility, touted by Obama and McCain, that change at the top can alter the whole culture of a bureaucracy. "Do I believe that the president of the United States can make a difference globally as well as right down to Asbury Park? Yes I do," says Reidy. "The leadership sends down the message," says Kinmon. "You get people to buy into it, make some changes, you're fair and honest. It's an exciting time in this country right now."

The multicoloured flag that flies all over town is a symbol of the middle-class gay community that has invested time and money here. Reidy says he hopes Asbury Park will maintain its diversity. "I don't just mean racial diversity or cultural diversity. For a community to be open and vital it requires that people of different economic statuses can live together." To critics of his administration's redevelopment plan, this is precisely what is under threat.

Everyone I talk to tells me that Asbury Park has improved beyond recognition, that "the whole of downtown was boarded up" as recently as the mid-1990s. But not everybody is happy about it. The turnaround has taken place in the context of a housing boom that is pricing ordinary families out. Asbury Park is coming back, but for whom?

On the corner of Grand and Sewall Avenues, Kerry Butch shows me derelict buildings that used to be an African-American and Hispanic neighbourhood. The Prince Of Peace church is shuttered, with a neon sign in pieces out front. A group of black teenagers hangs around in the shade, drinking from two-pint bottles of beer on a Wednesday afternoon.

The plan that brought developers Madison Marquette to Asbury Park established a redevelopment zone that extends a few blocks back from the ocean, where the council can seize properties under eminent domain (compulsory purchase) legislation. Most people sold up before they were asked to leave.

"The concept of redevelopment sounds really good," Butch says. "It sounds like they're going to invest in Asbury. Finally, we're going to get a chance.But what people don't understand is they can take your property. Either you get pushed out because of eminent domain or you get pushed out because you can't afford things any more." Butch bought her own house in 2000 for $63,000. She sold it four years later for $350,000 and moved to an apartment downtown.

The First United Methodist Church is still going strong, but its pastor, Sony Augustin, tells me that "almost every day someone comes and says, Pastor, we are leaving.' People feel that they are no longer needed - Get out, we have new people coming, you cannot live in this area close to the ocean'." Rents, food prices and energy prices are all rising. A weekly lunch club that used to serve 25 people now caters for three times as many.

To Augustin, this poverty and lack of opportunity is not simply economic forces at work. "People in Asbury Park feel that government is failing them," he says. "Take a look at the school system. You can't just say that the students are all that bad. It has to be something else.'' The city's high school isn't quite the worst in New Jersey, but in the most recent rankings it came 345th out of 356. People describe it as "dismal", "atrocious", "criminal" and "improving". Three in four pupils qualify for a free or discounted lunch. Just over half the kids who start ninth grade graduate.

Several people I speak with describe the city's problems as a failure of collective responsibility made manifest at the level of individual families. The Little League baseball coach despairs that fathers never show up to watch their kids play.

Artist turned landlord Pat Schiavino, who has made the redevelopment of Asbury Park his life's work, tells me: "I've been here so long and housed so many people and got to know the community that I could tell you with 90% accuracy which kids will go to jail, because of what they see and how they grow up."

Asbury Park's unemployment rate is 11.6%, twice the national average. "The only jobs here are menial labour jobs and there aren't enough of them," Schiavino says. "You cut grass, wash dishes or wait tables. Unfortunately that's a vicious cycle. There's nothing to emulate so kids grow up in households where selling drugs or welfare is the norm.

"I don't think it's Asbury Park. I think it's most urban areas. People are trapped and can't get out. These kids grow up depressed, unhealthy, with no spirituality. It becomes society's problem, but you can't just throw money at it. It doesn't work."

The statistics bear this out. Cost per pupil at Asbury Park High School is almost $20,000 a year, double the state average. Class sizes are tiny by comparison with Scottish schools, just 10 students for every teacher. But the educational system is somehow failing this generation as badly as it failed their parents.

The city council has spent heavily on recreation. There is much pride in the high school football team, which has just won the state championship for the first time in 20 years. In the kiddie version, Pop Warner football, Asbury Park's team won a national title last year.

New Jersey gets the worst value of any state in the US for its taxes, receiving just 61 cents from the federal government for every dollar it puts in. Asbury Park's revival is dependent on the success of private development, but the apartments aren't selling.

The council has mandated that 20% of the construction workers building the new Asbury Park must be locals. The beachfront contract provides for $7 million in affordable housing, to be built in a less desirable spot. So far only $2 million has been received. Organisations like Habitat For Humanity and Interfaith Neighbors do their best to fill the gap, but the reality is that in an attempt to solve problems caused by long-term under-investment and bad governance, the family silver has been sold.

"In its heyday, from the 1920s to the 1960s, the waterfront supported hundreds of families," Kerry Butch says. "By selling it to Madison Marquette, which is a corporate entity, the best we can hope for is some really good waitressing jobs, maybe a couple of mid-level management jobs, but it's not going to be the wholesale lifeblood economy that it was at one time."

On my last night in Asbury Park, I eat dinner at the Adriatic, a crumbling restaurant in the middle of the redevelopment zone, just waiting to be knocked down. Its owner, Stanley Tokic, is passing the time until his retirement happily enough. He has an American success story to tell, four decades after he got off the boat from Croatia, with two children in good jobs to show for it.

At the bar, construction worker Philip Parratt tells me that only a small percentage of Asbury Park is being rebuilt with union labour. He blames big business for squeezing the middle class and the government for letting them do it.

"They've exported jobs out of the country, for cheap labour, and the jobs they couldn't export, they imported cheap labour," he says. "We give amnesty to people, wherever they come from, as long as they work for nothing. Corporations aren't supposed to be part of our government, but they are. They should be flying the Exxon Mobil flag over the White House, because they control it." He agrees with Stanley, though, that America is "the greatest country in the world".

NEW Jersey is socially liberal and almost always votes Democrat. The question is whether I would have encountered such widespread dissatisfaction in a less reliably blue state. In every recent national poll, around three in four Americans said they think the country is on the wrong track. This measure, more than any other, is what defines a change election.

The people I meet in Linden and Asbury Park, some struggling to deal with the consequences of globalisation, others threatened by a housing crisis that originated on Wall Street, are united by a common belief that the economy is serving fewer people than it used to, fewer people than it should.

People complain to me about the escalating cost of healthcare, high taxes, impossibly expensive petrol, a lack of good jobs and insufficient protection for American workers.

Often, without prompting, they will punctuate this list of grievances with "I love this country". Both candidates believe that good governance can trickle down and rise back up. In his Obama endorsement, Springsteen described America as "a generous nation with a citizenry willing to tackle nuanced and complex problems". The next US president needs him to be right.