Analysis: Jobs rate gives Obama positive plot line

Pres­i­dent Barack Obama has a quiet lunch with a small group of sup­port­ers at a restau­rant in Wash­ing­ton, Fri­day, Jan. 6, 2012. (AP Photo/J. Scott Applewhite)

JIM KUHNHENN

Asso­ci­ated Press

WASHINGTON (AP) — The promis­ing drop in unem­ploy­ment on Fri­day looks like a job-security bonus for Pres­i­dent Barack Obama as well, under­cut­ting Repub­li­cans’ asser­tions that his eco­nomic poli­cies have failed. The pres­i­dent him­self her­alded the news with his most con­fi­dent assess­ment yet.

“We’re start­ing to rebound,” he declared. “We’re mov­ing in the right direction.”

It’s still 10 months until Elec­tion Day, and while the nar­ra­tive is pos­i­tive for Obama now, the econ­omy could still turn sour again. The Repub­li­cans who want his job were giv­ing him no credit on Fri­day, and Rick San­to­rum even sug­gested hir­ing was improv­ing because busi­ness own­ers fig­ured Obama was on his way out.

But December’s 8.5 per­cent job­less rate — down from 8.7 in Novem­ber and 9 per­cent in Octo­ber — gives Obama a pos­i­tive story line through the Repub­li­can pres­i­den­tial pri­maries in Jan­u­ary and under­scores other bright spots emerg­ing on the eco­nomic scene for his year­long fight for re-election.

More good eco­nomic news: The aver­age work­week length­ened, aver­age hourly pay rose and the length of time peo­ple spent unem­ployed also declined. To some econ­o­mists the data indi­cated the econ­omy was approach­ing “escape veloc­ity” — the space age term to describe the abil­ity of a recov­ery to sus­tain itself and break away from a recession’s grav­i­ta­tional pull.

As Obama’s poten­tial rivals fight their way toward the Repub­li­can nom­i­na­tion by try­ing to dis­tin­guish them­selves from each other and from Obama, the news on jobs dilutes a cen­tral theme of their can­di­da­cies — that Obama has failed to turn the econ­omy around.

More Amer­i­cans now expect the econ­omy to improve this year than to get worse, accord­ing to a recent Asso­ci­ated Press-GfK poll. At the same time, Obama is being held more account­able for what happens.

Obama has been loath to crow about any pos­i­tive eco­nomic indi­ca­tors, and White House econ­o­mists have repeat­edly stressed they do not read much into a sin­gle month’s report.

So it was notable on Fri­day that the pres­i­dent, while offer­ing the cus­tom­ary cau­tions, could barely con­tain his opti­mism. Three times dur­ing brief remarks to staff at the Con­sumer Finan­cial Pro­tec­tion Bureau he said the econ­omy or the coun­try was “mov­ing in the right direc­tion.” Decem­ber marked the fourth straight month of decline in the job­less rate.

“A lot of fam­i­lies are still hav­ing a tough time. A lot of small busi­nesses are still hav­ing a tough time,” he said. “But we’re start­ing to rebound. We’re mov­ing in the right direc­tion. We have made real progress.”

Still, Obama is likely to face the high­est unem­ploy­ment rate on Elec­tion Day of any pres­i­dent since Franklin Delano Roo­sevelt. A key to his re-election will be whether the econ­omy can sus­tain the encour­ag­ing hir­ing trend. Time and again, David Axel­rod, his top polit­i­cal adviser, has said the actual unem­ploy­ment num­ber is not as impor­tant as the trajectory.

Con­sider Jimmy Carter, who lost his re-election bid to Ronald Rea­gan as unem­ploy­ment climbed from 6 per­cent in Octo­ber 1979 to 7.5 per­cent in Octo­ber of the 1980 elec­tion year. Like­wise, George H.W. Bush lost to Bill Clin­ton in 1992 in the midst of ris­ing unem­ploy­ment, which went from 6.9 per­cent Sep­tem­ber 1991 to 7.6 per­cent in Sep­tem­ber 1992.

Rea­gan man­aged to get re-elected in 1984 even though unem­ploy­ment stood at 7.4 per­cent in Octo­ber of that year. The dif­fer­ence was that his unem­ploy­ment trend line had been drop­ping since the spring of 1983.

For Obama, the pos­i­tive trend is hardly pure eco­nomic sunshine.

While employ­ers added 200,000 in Decem­ber, econ­o­mists say that at that pace it would take about seven years to return the unem­ploy­ment rate to pre-recession lev­els. And the num­ber is still higher than when Obama took office.

What’s more, the econ­omy appeared to be on the rebound last spring only to tumble.

“The pub­lic has seen green shoots before that haven’t proved to be good omens of things to come,” said Andrew Kohut, pres­i­dent of the Pew Research Cen­ter. “This has to keep going before it pays polit­i­cal dividends.”

Repub­li­cans seek­ing to chal­lenge Obama for the White House kept up their eco­nomic crit­i­cism Fri­day even as they acknowl­edged an improved jobs pic­ture. The president’s poli­cies, they said, rather than being a cause for greater employ­ment, have impeded faster growth.

For­mer House Speaker Newt Gin­grich called the job cre­ation a “very ane­mic program.”

“You don’t see dynamic eco­nomic growth, you don’t see an engine pulling us out of the reces­sion right now,” he told reporters before tour­ing a gun man­u­fac­turer in New­port, N.H. “I think the pres­i­dents’ pro­gram is slow­ing down the recov­ery rather than accel­er­at­ing it.”

For­mer Mass­a­chu­setts Gov. Mitt Rom­ney, in a state­ment, said Obama’s poli­cies “have slowed the recov­ery and cre­ated mis­ery for 24 mil­lion Amer­i­cans who are unem­ployed, or stuck in part-time jobs when what they really want is full-time work.”

And San­to­rum, the for­mer Penn­syl­va­nia sen­a­tor sug­gested — with a grin — that the eco­nomic good news reflected the public’s expec­ta­tions that a Repub­li­can might win the White House in November.

Repub­li­cans still have an eco­nomic argu­ment to make, even if the jobs pic­ture improves. Some Repub­li­can poll­sters argue that con­trol­ling deficits and the national debt are still win­ning argu­ments for the GOP. In last month’s AP-GfK poll, Repub­li­cans held a 12-point advan­tage as the party more trusted to man­age the fed­eral bud­get deficit. On the econ­omy gen­er­ally, the two par­ties were about even.

And while the nar­ra­tive is pos­i­tive for Obama now, the eco­nomic sit­u­a­tion could still sour things for him.

Europe remains threat­ened with reces­sion if its debt cri­sis deep­ens, and econ­o­mists pre­dict only mod­est U.S. eco­nomic growth in 2012. In addi­tion, the num­ber of unem­ployed remains stratos­pheric. And the job­less rate is likely to tick up as the coun­try gets closer to Elec­tion Day as dis­con­tented job searchers who aren’t cur­rently counted in the unem­ploy­ment fig­ures find rea­son to scour the want ads once again.

Though many econ­o­mists credit the $800 bil­lion stim­u­lus plan Obama pushed through Con­gress in 2009 for help­ing the coun­try begin climb­ing out of the reces­sion, the spend­ing it required has been unpop­u­lar with the pub­lic and a tar­get of Republicans.

So on Fri­day, in his remarks, Obama attrib­uted the bet­ter jobs num­bers to the 2011 pay­roll tax cut instead. And he called on Con­gress to extend if for the full year.

Posted by AP News on Jan 6 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.