The political importance of the unemployment trend line
In politics, perception often matters more than reality. And that goes double for the politics of the economy.
Economists spend their lives poring over numbers that provide detailed information about how and whether the economy is growing. Average people, on the other hand, tend to look at a single number to assess the economy’s relative health: the unemployment rate.
And, it’s not even the exact number that most people fixate on. It’s the trend line. Are things getting marginally better, marginally worse or staying about the same?
That trend line is the single most telling image of how the American public feels — and how they are likely to vote on — the economy heading into the 2012 election.
Given that, today’s jobs report from the Bureau of Labor Statistics is good news for President Obama. The unemployment rate is still at 8.8 percent — that is down from 9.8 percent last November — and 216,000 jobs were created.
According to an analysis by Matt McDonald of Hamilton Place Strategies, a communications and policy consulting firm, if the economy can create roughly 185,000 jobs a month between now and November 2012, the unemployment rate will drop below eight percent by election day.
“This projection is down from last month’s benchmark of 190,000 new jobs and continues a string of modest good news on the jobs front for the President,” wrote McDonald.
The last time the unemployment rate was below eight percent was just prior to Obama taking office in January 2009, a fact Republicans will undoubtedly focus on in the campaign to come.
But, a downward trend line on the unemployment rate — if not a drastic reduction in the actual number — will allow the President to make the case that the economic policies he put into place over his first term in office are working and, therefore, he needs a second term to make things even better.
One need only to look as far as Ronald Reagan for evidence of the power of the economic trend line.
In March 1983, the unemployment rate stood at 10.3 percent. It steadily declined over the intervening 20 months and in October 1984 it stood at 7.3 percent.
While a 7.3 percent unemployment rate was no one’s economic dream scenario, the movement was in Reagan’s direction. And voters reacted accordingly — handing him a 49-state re-election victory over Walter Mondale.
Obama has to hope the unemployment trend line follows that same pattern for the remaining 19 months of his first term. If it does, his hand will be considerably strengthened in his bid for a second term.