Traverse City, Mich. ? When word came last week that the unemployment rate in Michigan had jumped up to 7 percent in July, a shiver of apprehension went through the Democratic Party, not just in Michigan but around the nation.

Even though the jobless figure may have been inflated by the seasonal layoffs in auto plants retooling for the new model year, it was bad news for Gov. Jennifer Granholm, one of the rising stars of the Democratic Party. When Granholm won the governorship four years ago, ending 12 years of Republican control in Lansing, she was hailed as a bright new figure on the national scene. With cover girl looks and a commanding platform style, she was seen as presidential material – except that her Canadian birth made her ineligible for that office.

But the last four years of confronting a Republican Legislature and a declining auto industry have taken a toll on Granholm’s standing here at home, and the latest economic news comes at a bad time, just as her re-election campaign is gearing up. Republicans have been pounding Granholm with ads claiming that “only three states have lost jobs in the last four years. Two of them – Louisiana and Mississippi – were devastated by hurricanes. The third is Michigan.”

In a year when Republicans are on the defensive almost everywhere else, the GOP smells a chance for victory in Michigan – and a leg up on a vital presidential battleground for 2008, a state where such Republican hopefuls as Arizona Sen. John McCain and Massachusetts Gov. Mitt Romney are already spending lots of time.

A poll released last week by The Detroit News showed the race a statistical tossup, with Granholm leading 50 percent to 47 percent over Republican challenger Dick DeVos. DeVos, a wealthy businessman, is exploiting Granholm’s vulnerability with some of the most distinctive political ads I’ve ever seen. One running now has an anonymous voter – filmed during a two-hour focus group somewhere in outstate Michigan – giving voice to the frustrations that so many Michiganders share these days.

The mustachioed man in his 50s uses unusually blunt language: “I’ve spent two months looking for a job. This last month we had to dip into our savings to pay for health care, a thousand bucks a month, but I can’t do that very long without saying, ‘Crap! I got to move.’ Nobody seems to be serious about all the work that’s been leaving the state. The next governor, they need to be serious about bringing work into this state to take care of the people who are voting them into that office.”

The ad concludes with a DeVos for Governor banner, but his name is never mentioned by anyone; he appears for only a brief moment at the end during the legally required disclaimer. Absent, too, is any description of his proposed economic remedy – but it is spelled out in a booklet and on a Web site capsulized in other ads.

DeVos is a first-time candidate, but has surrounded himself with tested pros, including his wife, Betsy, a former state Republican chairman, and several of the people who helped John Engler to his victories as governor. He is running a very disciplined campaign, downplaying the conservative social issues that have engaged him in the past and focusing on his promise to bring business – and jobs – back to Michigan.

Granholm, for her part, accuses DeVos of running a stealth campaign. “He’s spent millions on television,” she told me recently, “and people still don’t know what party he belongs to or what business he ran.” Now that the final legislative session of her term has ended, Granholm, who has hoarded her more limited campaign funds, will begin to tell people in TV ads what she wants them to know about DeVos.

She will tell them that he is a Republican, linked to President Bush, who is no more popular here than elsewhere in the Midwest. And he ran Alticor, the firm formerly known as Amway, and she will say that it outsourced jobs to China – the very thing that has hurt Michigan’s economy.

In truth, parts of Michigan are doing well, including this area in the northwest corner of the Lower Peninsula, where more and more executives from Chicago and other big cities are living and working via Internet and cellphone, while enjoying the lakes and golf courses in their backyards. Ann Arbor and other university towns are also thriving, and some high-tech is beginning to arrive in the state, lured by new business incentives pushed by the governor.

A turnaround may be coming, but it’s uncertain if it will show up in time to save Jennifer Granholm.