Decline in U.S. Jobs Could Prove Costly to GOP Nominee
Saturday, February 2, 2008
The economic storm clouds gathering over the 2008 presidential race burst open yesterday with news that the economy shed 17,000 jobs in January, the first job loss in 52 months and the clearest sign yet that the economy may be in a recession.
For Republicans already facing an economic headwind, the jobs numbers could prove punishing. Traditionally, the party holding the White House is blamed for bad economic times -- and credited for booms -- and economists said yesterday that this year should be no different, even if GOP candidates continue to distance themselves from President Bush.
For Democrats, job losses could complete the anti-Republican narrative their candidates have been building for months.
"This isn't a random event. This is the culmination of a bunch of disturbing trends we've seen in seven years," said Austan Goolsbee, a University of Chicago economist and chief economic adviser to Sen. Barack Obama (D-Ill.). "Stagnant incomes, rising costs in energy and food, and little to no personal savings have left families with no margin of error."
Economists forecasting the 2008 race have given a slight edge to the Democrats. Global Insight, a Massachusetts-based forecaster, was predicting that the Republican nominee will garner 49 percent of the vote in November, based on recent income growth, unemployment and the power of incumbency. With yesterday's jobs report, that forecast will slip to as low as 47 percent, said Nariman Behravesh, the firm's chief economist.
The GOP contenders "are far enough away from the Bush administration where they won't be completely tarred by the Bush brush," he said. "But, nevertheless, there will be a tendency to see Republicans as responsible for this mess."
Obama and Sen. Hillary Rodham Clinton (D-N.Y.) pounced on the jobs data. Clinton proclaimed "a second Bush recession," while Obama blamed the news on "seven years of George Bush's failed economic policies."
Of all the indicators of late, including stagnant economic growth and falling housing prices, job losses have particular political resonance. "When job numbers go down, it's a trumpet sounding that the economy is in trouble and the economy is going to be the number one issue," said Sen. Charles E. Schumer (N.Y.), chairman of the Democratic Senatorial Campaign Committee.
In economic terms, a loss of 17,000 jobs is statistically insignificant. For example, the Labor Department's initial report that only 18,000 jobs were created in December was later revised to a gain of 82,000 jobs, leading some economists to say that January actually may have created a few jobs.
But few economists put a positive gloss on the labor market.
"It's pretty sobering news on the economic outlook," said Douglas J. Holtz-Eakin, a former Congressional Budget Office director and now chief economic adviser to Sen. John McCain (R-Ariz.).
The manufacturing sector -- seen in political circles as a sign of national economic might -- has lost 269,000 jobs over the past 12 months, and 28,000 jobs in January alone. Manufacturing employment now accounts for less than 10 percent of the job market for the first time since data began being collected in the 1930s, said Dean Baker, co-director of the liberal Center for Economic and Policy Research.