President Obama’s senior political adviser David Plouffe said Wednesday that people won’t vote in 2012 based on the unemployment rate.
Plouffe should probably hope that’s the case, since dismal job figures aren’t expected to get any better for Obama and the economy on Friday.
Most economists expect a report from the Bureau of Labor Statistics to show that the nation added about 100,000 jobs in June. That’s not enough to keep up with population growth, let alone lower the unemployment rate or make a dent in the 9 million jobs lost during the so called Great Recession.
[UPDATED: The jobs report released on Friday showed the economy added only 18,000 jobs, much less than anticipated. The unemployment rate creeped up to 9.2 percent.]
It’s looking more and more like Obama will have to do something no president has done since Franklin Roosevelt: Win reelection with unemployment around 8 percent.
Ronald Reagan, another president Obama is sometimes compared with, was reelected in 1984 when unemployment was 7.2 percent. Obama isn’t likely to see a number that low.
Mark Zandi, chief economist for Moody’s Analytics, predicts the nation will have added 110,000 jobs in total in June, with 125,000 added in the private sector. Hiring by the public sector will continue to fall.
The economy would have to add 350,000 jobs every month between now and December 2014 to get back to the pre-recession low of 5 percent unemployment, last seen in December 2007, according to the Economic Policy Institute (EPI).
Reagan saw that kind of growth after the recession of the early 1980s, and it helped him win reelection by a comfortable 18 points. He also faced Walter Mondale, a weak opponent, from the opposing party — a bit of history Obama hopes to repeat in 2012.
The economy hasn’t seen such high-octane growth since August 1993 to February 1995, when it last averaged 350,000 jobs created per month. Even during the tech boom in the latter half of the 1990s, the economy didn’t average that many jobs, according to Heidi Shierholz, an economist with EPI.
The Obama campaign’s hope is that voters will feel the economy is improving in the fall of 2012, just as they did when Roosevelt and Reagan were reelected.
That seemed to be at the root of Plouffe’s remarks on Wednesday, as quoted by Bloomberg.
“The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers,” Plouffe said, according to Bloomberg. “People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ ”
The remarks will likely irritate Democrats who think Obama and his political team have taken their eye off jobs.
There’s some reason to think Obama could get a boost from the economy in the second half of the year, particularly given signs that the White House and congressional Republicans are moving closer to a deal that would lift the nation’s debt ceiling and cut trillions from annual deficits.
There’s no doubt such a deal would boost confidence in the economy and the political system. It could also boost hiring.
Layoffs have basically stopped since the recession, said Shierholz, but employers aren’t hiring even though corporations are expected to announce huge profits for the first half of the year.
“We are still treading water at the bottom of a deep hole,” said Shierholz.
The only real improvement in the labor market since the recession ended is with workers who have decided to sit out the slow economy and not look for a new job. That’s helped keep the unemployment rate low, Shierholz said.
Zandi argues the economy was sidetracked for the first half of the year by a number of shocks that he hopes are temporary.
They include the devastating tsunami in Japan that wreaked havoc on manufacturers around the world; turmoil in the Middle East; the ongoing conflict in Libya that sent crude oil prices to summer highs in the spring; and the debt talks, which Zandi said appear to have led the Treasury to slow outlays to avoid breaching the debt ceiling.
“The ill effects of these shocks are or will soon fade and even add to growth during the second half of the year,” Zandi said in an email. He expects payroll employment gains to be back near 200,000 by the end of the year.
If Zandi’s right and those gains continue through 2012, Plouffe might be proven right, too, as voters could be pleased with their position.
But there isn’t a lot of room for Obama to maneuver when it comes to the unemployment rate.