Analysts: Jobless numbers good for Obama but work remains
http://dervishcom.blogspot.com/2012/01/analysts-jobless-numbers-good-for-obama.html
WASHINGTON – The latest decline in the nation's jobless rate helps President Obama as he enters his re-election year, but economists and political consultants on both sides of the aisle say it's much too soon to declare victory.
Ever since Obama's incoming administration predicted his 2009 economic stimulus package would drive unemployment below 8%, the White House has been bedeviled by jobless numbers that reached 10% that October and have remained far above the 7.8% rate he inherited from George W. Bush.
Now that December's 8.5% rate is the lowest since Obama's first full month in office, the president and his advisers are feeling good about the trends: 3.2 million private-sector jobs created over 22 straight months of gains, including nearly 2 million last year alone.
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STORY: December unemployment rate lowest in nearly 3 years
"We're starting to rebound. We're moving in the right direction. We have made real progress," Obama said during a midday visit to the Consumer Financial Protection Bureau, which his 2009 financial overhaul law created. "Now is not the time to stop."
As Obama focuses more on his re-election fight and as his potential opponents, led by Mitt Romney, hammer him on the economy, four straight months of declining unemployment are sure to help the president. The reaction by Romney and other Republican presidential contenders was muted in comparison to their more aggressive responses last year.
"Thirty-five consecutive months of unemployment above 8% is no cause for celebration," Romney said in a statement. "Under President Obama, we have lost 1.7 million jobs — America deserves better."
Lessons from the past
The last two presidents who had a similar decline as they approached re-election won: Ronald Reagan and George W. Bush. Stable jobless rates helped Richard Nixon and Bill Clinton win second terms as well. Rising unemployment at this point in their terms worked against Jimmy Carter and George H.W. Bush.
Still, none of those presidents had a jobless rate as high as Obama faces 10 months before Election Day. The closest was Reagan's 8.3%, which dropped to 7.4% on the eve of the 1984 election.
The jobs gain makes it trickier for Republicans to wield Obama's job-creation record against him, as it now is better than the first-term performance of George W. Bush and even resembles that of Reagan, whose economy produced a surge of employment growth in the second half of his first term.
With less than a year to go before Election Day, the economy has now lost 1.05 million private-sector jobs since Obama took office - but has recovered three-fourths of the 4.2 million jobs lost in the president's first 13 months. The simple math is that the jobs deficit will be erased by June if job creation continues at December's clip. It would require only 110,00 new monthly jobs to get back to even by November.
Bush faced voters having presided over the loss of 1.17 million jobs through October 2004, the first president since the Depression to oversee negative private job growth. The economy produced 877,000 private sector jobs before George H.W. Bush was defeated by Bill Clinton in 1992.
The test for Obama and his rivals may become whether the economy behaves more like it did in the boom year of 1984, when it added 3.2 million jobs by October; 1992, when it added only 614,000 jobs and the incumbent lost; or 2004, when 1.77 million new jobs in 10 months helped Bush to a narrow victory.
Economists cite progress, pitfalls
Most economists and analysts say Obama would be lucky if the jobless rate fell to 8% by Election Day.
"This is good news, but it's not great news," says Douglas Holtz-Eakin, former domestic policy adviser to John McCain in the 2008 presidential race and former director of the Congressional Budget Office. "On the ground, it's not going to feel better."
On the other side, Roger Hickey of the liberal Campaign for America's Future also cautions against too much optimism.
"Obama would be making a mistake if they exaggerate the robustness of these jobs numbers," he says. "There's all kinds of economists who expect things to go stagnant for a while."
Among the pitfalls for the president as the campaign season advances are the potential for a recession in Europe, continuing risks of home foreclosures, only slow improvement in manufacturing and the possibility that holiday-season consumption proves short-lived.
On top of that is the likelihood that policy help gets tied up in Congress, where lawmakers must decide by Feb. 29 whether to continue Obama's payroll tax cut and expanded unemployment insurance.
Economist Mark Zandi of Moody's Analytics, who has advised the White House and Republicans in the past, says those policies should be extended through 2012 to bolster the chances for continued economic recovery.
If the economy continues to create 200,000 jobs per month or more, "that would provide some tailwind to all incumbents, including the president," Zandi says.
On the other hand, he says: "We've got a lot of things to be nervous about. It won't take much to derail the fragile economy."
Republican reaction muted
Romney's reaction Friday was less aggressive than his comments in September, when after zero job growth in August, he said: "Today's disappointing unemployment report is further proof that President Obama has failed. President Obama oversaw an economy that created zero jobs last month, and that is unacceptable."
Like Romney, the Republican candidates, who face off in the New Hampshire primary on Tuesday, stressed the more negative news of the past rather than more recent jobs gains.
"Three full years into the Obama presidency, and there are still 1.7 million fewer Americans going to work today than there were on Obama's Inauguration Day," said former House speaker Newt Gingrich.
Former Pennsylvania senator Rick Santorum said the jobless rate dropped because of "optimism that Republicans will take the White House."
Rep. Ron Paul of Texas called the new numbers a good sign, although the real unemployment is actually higher because many people have stopped looking for work. "That doesn't mean that we shouldn't be very pleased with more jobs," he said.
"This financial crisis is far from over," Paul said. "We are locked into this unless you can deal with the debt and the spending world wide. A little blip, glad to see it, but boy, I don't think anybody should be lulled."
Tim Miller, a spokesman for former Utah governor Jon Huntsman, said, "Until we change the structural problems that President Obama has ignored — crippling debt, a broken tax code, over-regulation, dependence on foreign oil — we will not create an environment that will allow entrepreneurs to bring about real, sustainable job growth."
Ever since Obama's incoming administration predicted his 2009 economic stimulus package would drive unemployment below 8%, the White House has been bedeviled by jobless numbers that reached 10% that October and have remained far above the 7.8% rate he inherited from George W. Bush.
Now that December's 8.5% rate is the lowest since Obama's first full month in office, the president and his advisers are feeling good about the trends: 3.2 million private-sector jobs created over 22 straight months of gains, including nearly 2 million last year alone.
*
STORY: December unemployment rate lowest in nearly 3 years
"We're starting to rebound. We're moving in the right direction. We have made real progress," Obama said during a midday visit to the Consumer Financial Protection Bureau, which his 2009 financial overhaul law created. "Now is not the time to stop."
As Obama focuses more on his re-election fight and as his potential opponents, led by Mitt Romney, hammer him on the economy, four straight months of declining unemployment are sure to help the president. The reaction by Romney and other Republican presidential contenders was muted in comparison to their more aggressive responses last year.
"Thirty-five consecutive months of unemployment above 8% is no cause for celebration," Romney said in a statement. "Under President Obama, we have lost 1.7 million jobs — America deserves better."
Lessons from the past
The last two presidents who had a similar decline as they approached re-election won: Ronald Reagan and George W. Bush. Stable jobless rates helped Richard Nixon and Bill Clinton win second terms as well. Rising unemployment at this point in their terms worked against Jimmy Carter and George H.W. Bush.
Still, none of those presidents had a jobless rate as high as Obama faces 10 months before Election Day. The closest was Reagan's 8.3%, which dropped to 7.4% on the eve of the 1984 election.
The jobs gain makes it trickier for Republicans to wield Obama's job-creation record against him, as it now is better than the first-term performance of George W. Bush and even resembles that of Reagan, whose economy produced a surge of employment growth in the second half of his first term.
With less than a year to go before Election Day, the economy has now lost 1.05 million private-sector jobs since Obama took office - but has recovered three-fourths of the 4.2 million jobs lost in the president's first 13 months. The simple math is that the jobs deficit will be erased by June if job creation continues at December's clip. It would require only 110,00 new monthly jobs to get back to even by November.
Bush faced voters having presided over the loss of 1.17 million jobs through October 2004, the first president since the Depression to oversee negative private job growth. The economy produced 877,000 private sector jobs before George H.W. Bush was defeated by Bill Clinton in 1992.
The test for Obama and his rivals may become whether the economy behaves more like it did in the boom year of 1984, when it added 3.2 million jobs by October; 1992, when it added only 614,000 jobs and the incumbent lost; or 2004, when 1.77 million new jobs in 10 months helped Bush to a narrow victory.
Economists cite progress, pitfalls
Most economists and analysts say Obama would be lucky if the jobless rate fell to 8% by Election Day.
"This is good news, but it's not great news," says Douglas Holtz-Eakin, former domestic policy adviser to John McCain in the 2008 presidential race and former director of the Congressional Budget Office. "On the ground, it's not going to feel better."
On the other side, Roger Hickey of the liberal Campaign for America's Future also cautions against too much optimism.
"Obama would be making a mistake if they exaggerate the robustness of these jobs numbers," he says. "There's all kinds of economists who expect things to go stagnant for a while."
Among the pitfalls for the president as the campaign season advances are the potential for a recession in Europe, continuing risks of home foreclosures, only slow improvement in manufacturing and the possibility that holiday-season consumption proves short-lived.
On top of that is the likelihood that policy help gets tied up in Congress, where lawmakers must decide by Feb. 29 whether to continue Obama's payroll tax cut and expanded unemployment insurance.
Economist Mark Zandi of Moody's Analytics, who has advised the White House and Republicans in the past, says those policies should be extended through 2012 to bolster the chances for continued economic recovery.
If the economy continues to create 200,000 jobs per month or more, "that would provide some tailwind to all incumbents, including the president," Zandi says.
On the other hand, he says: "We've got a lot of things to be nervous about. It won't take much to derail the fragile economy."
Republican reaction muted
Romney's reaction Friday was less aggressive than his comments in September, when after zero job growth in August, he said: "Today's disappointing unemployment report is further proof that President Obama has failed. President Obama oversaw an economy that created zero jobs last month, and that is unacceptable."
Like Romney, the Republican candidates, who face off in the New Hampshire primary on Tuesday, stressed the more negative news of the past rather than more recent jobs gains.
"Three full years into the Obama presidency, and there are still 1.7 million fewer Americans going to work today than there were on Obama's Inauguration Day," said former House speaker Newt Gingrich.
Former Pennsylvania senator Rick Santorum said the jobless rate dropped because of "optimism that Republicans will take the White House."
Rep. Ron Paul of Texas called the new numbers a good sign, although the real unemployment is actually higher because many people have stopped looking for work. "That doesn't mean that we shouldn't be very pleased with more jobs," he said.
"This financial crisis is far from over," Paul said. "We are locked into this unless you can deal with the debt and the spending world wide. A little blip, glad to see it, but boy, I don't think anybody should be lulled."
Tim Miller, a spokesman for former Utah governor Jon Huntsman, said, "Until we change the structural problems that President Obama has ignored — crippling debt, a broken tax code, over-regulation, dependence on foreign oil — we will not create an environment that will allow entrepreneurs to bring about real, sustainable job growth."
