The June jobs report — 80,000 jobs added in the month and an unemployment rate of 8.2 percent — is full of bad news for President Obama as he seeks to make the case to the American electorate that the economy is slowly but surely improving.
The politics of the economy are heavily dependent on perception and that perception is heavily driven by the unemployment rate. (Economists roll their eyes at using such a simplistic measure to gauge the relative health of the economy but — and we can’t believe we are writing this — it is what it is.)
That’s why this chart — detailing the unemployment rate since President Obama is so incredibly important to his re-election prospects.
From last fall through the first quarter of this year, the chart above was a major positive for President Obama and his team. The unemployment rate declined slowly but steadily, a drop that allowed the President to make the case that his policies had begun to have their desired effect.
In the last three months, the chart has told a very different story. The downward trend in the unemployment rate has ceased and even begun to tick up slightly. (The unemployment rate in April was 8.1 percent; it was 8.2 percent in May and June.)
If the unemployment trend line stays at the status quo or rises even slightly, it’s hard to see Obama winning re-election this fall. If he does, he will be making history since it’s a virtual impossibility that the unemployment rate will dip below 7.4 percent, which is where it stood in November 1984 when Ronald Reagan won reelection. (No president since World War II has been reelected with the unemployment rate higher than 7.4 percent.)
The key to Reagan’s victory then — as it will be for Obama if he wins this fall — is that while the unemployment rate was high, it was moving in the right direction by election day.
Courtesy of the good folks at Hamilton Place Strategies, an economic-minded Republican consulting firm, here’s a comparison of the unemployment rates in the first 42 months of the Reagan and Obama presidencies.
From the 32nd month of Reagan’s presidency onward, the unemployment rate moved — basically — downward. The drop for Obama since the 32nd month of his own presidency had been moving in a similar direction — until the last three months that is.
The trend line on the unemployment rate is everything. Obama needs another downward dip — and he needs it soon.