What the big drop in the unemployment rate means for Obama’s reelection

AEI Blog ^ | 12/02/11 | James Pethokoukis

[freespirited]

 

Despite a sharp drop in the U-3 unemployment rate last month to 8.6 percent from 9.0 percent, there was no triumphalism coming from the Obama White House this morning. As economic adviser Alan Krueger wrote on the White House blog about the November employment numbers:

Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but the pace of improvement is still not fast enough given the large job losses from the recession that began in December 2007. … The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.

Sobriety is certainly called for when the main reason the unemployment rate dropped so much was due to a shrinking labor force. And the broader U-6 rate, which includes part timers who wished they were full timers, is at a stomach-churning 15.6 percent. (Also recall that the unemployment rate during the last pre-Great Recession year averaged 4.6 percent.) But at least jobs are being created and the unemployment rate is falling.

So politically the November jobs report is a net plus for the Obama reelection effort. Or is it? Although pundits like to focus on the unemployment rate, it may not be the determining economic factor for 2012. Yale political scientist Ray Fair has a highly regarded election forecasting model that takes into account factors such as the power of incumbency, real per capital GDP growth, and inflation. But the unemployment rate is not one of them. If you assume the economy in 2012 looks a lot like the economy in 2011—as many Wall Street economists currently do—here is how the presidential election would play out:

Bottom line: As you can see, President Obama would get less than 48 percent of the two-party vote and would be unlikely to command an electoral college majority. (Interesting sidenote: Incumbent presidents very rarely win with worse popular vote percentages than for their first term.) Now, other political scientist like to look at income numbers. And those can’t please the White House, either (via MKM Partners):

The product of hours worked and wages paid is a proxy for nominal income, and it has decelerated to a 2.6 percent annualized rate over the last six months from just over a 4 percent rate this summer (prior to the sharp tightening in financial conditions).

Obama still needs a rapid acceleration in growth to be considered anything better than even-money in 2012. And you can be sure to see more of this modified Romer-Bernstein chart from the GOP (via the always helpful and must-read Right Sphere):

 

[freespirited]

As long as Obama loses, I don't care what his vote share is.

[E. Pluribus Unum]

Like everybody isn’t well aware that any number that comes from Washington is a lie.

[tet68]

Big drop??

Now I’ve heard everything.

[whitedog57]

It DIDN’T DROP!!!!!!!!!!!

A Closer Look at Unemployment: Did it REALLY Fall to 8.6%? More People Dropped Out of Labor Force Than Jobs Added AND … Wage Income Fell

http://confoundedinterest.wordpress.com

[doc1019]

What the big drop in the unemployment rate means for Obama’s reelection

Nothing. After the seasonal workers are let go, the unemployment numbers will go back up.

[I Drive Too Fast]

Of course the rate dropped. They QUIT counting the 300,000+ people who QUIT LOOKING for a job.

[Paladin2]

"Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression"

BS

[Brimack34]

What about Obamacare and fast and furious and green energy sellouts and the housing market.

[Ole Okie]

Added 120,000 net jobs.

Removed something like 350,000 from the active workforce (those who had quit looking).

I could play with numbers like that all day and make the unemployment percentage assume any value I’d like.

[jimpick]

The only ones who are going to fall for this B.S. are the ones who just found a job, all 120k. You can’t polish a turd. Inflation is sky high and that is report as almost nothing. People are not stupid enough to fall for this B.S. when it hits the pocket book. In other words actions speak loader than words.

[Olog-hai]

Yup . . . same old “fuzzy math” they’ve been using to distort the true unemployment rate.

[G Larry]

What the big drop in the unemployment rate means...

That Obama will lie, cheat, and manipulate every agency of government, in hopes he can fool voters again.

There was no drop in the unemployment rate!
Having more people quit looking for work DOES NOT MAKE THEM EMPLOYED!!!

[Recovering_Democrat]

Hussein blows. Big Time.

[bmwcyle]

There is no truth out of Washington any more.

[Varsity Flight]

Soviet Winter

Phony-Care = The Workcamp.

[molson209]

How anyone could fall for this Ice Cream Merchants pitch again

[Loyal Sedition]

Just another set of Gov. numbers that will be “Revised” later.

At the end of a Friday, when some other major story breaks to push it to the back pages.

Probably AFTER the election.

[Loyal Sedition]

“Lies, damn lies, and statistics”.

[CapnJack]

“Like everybody isn’t well aware that any number that comes from Washington is a lie.”

On the contrary, there will be lots of people who will believe that the economy is recovering. Only people who pay attention to these BS numbers know it is BS.

I believe the majority of people will look at the “drop” in unemployment and say “wow, things are getting better”.

Remember, a huge portion of America still gets it's news from the DNC controlled media.

[aimhigh]

Now, consider the timing. Congress will extend the unemployment extensions one more time, through May or June of 2012. Then they will end, sending the unemployment statistics way down, just in time for the election.