Jan. 7 (Bloomberg) -- President Barack Obama called yesterday’s jobs report a sign the U.S. economy is on the rebound. His prospects for re-election may depend on it.
The drop in the unemployment rate in December to 8.5 percent, a three-year low, showed the job market gaining momentum heading into a presidential election campaign that will be shaped by the state of the economy.
The Labor Department figures cap four months of declines in the unemployment rate and six consecutive months of jobs gains of 100,000 or more. Employers expanded payrolls by 200,000 in December, exceeding a median estimate of 155,000 in a Bloomberg News survey. For all of 2011, 1.64 million positions were created, the most since 2006, after a 940,000 increase in 2010.
“This can make a difference for Obama if it persists into the spring,” said Frank Newport, editor-in-chief of the Gallup Poll in Princeton, New Jersey. “It’s the sense of direction in the economy that matters more than the numbers.”
After the longest period of unemployment above 8 percent since the Great Depression, the economy is the focal point of the 2012 campaign, with voters consistently telling pollsters it is the top issue for them.
Former Massachusetts Governor Mitt Romney and other Republican candidates have cast Obama as an ineffective steward of the economy and his policies, such as the 2009 stimulus, as failures. Obama has pointed to progress on jobs and the challenge of confronting the worst recession in seven decades, while arguing that Republicans would return to the policies of President George W. Bush that preceded the 2008 collapse of financial markets.
A pickup in the recovery at the start of last year was blunted by the earthquake and tsunami in Japan, the worsening European debt crisis and a surge in oil prices. Obama tempered his embrace of the evidence that the economy is “moving in the right direction” with some caution.
“There are a lot of people that are still hurting out there,” he said at the offices of the Consumer Financial Protection Bureau in Washington. “After losing more than 8 million jobs in the recession, obviously we have a lot more work to do.”
Romney, the Republican front-runner, responded with criticism of Obama’s economic performance.
While Romney said he was “delighted” to see the unemployment rate drop, he said Obama’s record had been a “failure.” Romney acknowledged that an improving economy “may well” boost Obama’s re-election chances.
“I’ll have to make sure that my message is clear and honed well,” Romney said.
Texas Congressman Ron Paul dismissed the significance of the economic news.
“A little blip -- glad to see it, but boy, I don’t think anybody should be lulled,” Paul said.
Andrew Kohut, president of the Pew Research Center in Washington, said the economy will have to show sustained improvement to reverse the perception of a public that has watched rebounds peter out several times already.
“We’ve seen green sprouts before,” Kohut said. “It’s going to take more for a public that has had a very bleak outlook to decide things are looking better.”
Newport said voter perceptions of the economy typically are set during the spring and summer before the November election.
While a majority of voters still views the economy as deteriorating, perceptions have been improving since early August, when they reached a low in the aftermath of the standoff between the White House and Congress over raising the national debt limit, Newport said.
In the latest Gallup tracking poll conducted Jan 3-5, 36 percent of Americans said the economy is getting better versus 59 who said it is worsening. As recently as Dec. 1-3, 27 percent saw the economy improving versus 69 percent worsening. In a poll Aug. 7-9, 16 percent said the economy is getting better and 80 percent said it’s getting worse.
Obama’s job approval has been edging up in recent months. The Gallup tracking poll showed him with an approval rating of 45 percent Jan. 3-5 against monthly averages of 43 percent in December and November and a monthly average of 41 percent in each of the prior three months.
Yesterday’s jobs numbers won’t change the strategy for Republican presidential candidates, according to Matt Mackowiak, a Republican strategist and president of Potomac Strategy Group LLC in Washington.
“One good jobs number doesn’t erase a misery across the country,” he said in an interview. “No one believes that because the numbers were better than expected, that the economy is in good shape.”
Steve Elmendorf, a deputy campaign manager for Democrat John Kerry’s 2004 presidential campaign who is now a lobbyist, said “any economic good news is good news” for Obama.
Elmendorf said the president can make the case that if voters re-elect him he can continue moving the economy in the right direction, while, “There’s a danger if you elect the other guy” the recovery could stall.
Losses in Recession
Still, little headway has been made in recovering the 8.75 million jobs lost as a result of the recession that ended in June 2009. The administration’s own forecast, issued Sept. 1, is for the unemployment rate to remain above 8 percent in 2012.
Only one U.S. president has been re-elected since World War II with a jobless rate above 6 percent. Ronald Reagan won a second term with the rate on Election Day 1984 at 7.2 percent, having dropped almost 3 percentage points in the previous 18 months.
Also important will be the jobs situation in swing states that Obama needs to capture to win a second term.
Obama campaign manager Jim Messina and chief political adviser David Axelrod last month identified eight states where they say the general election will be fought: Arizona, Colorado, Florida, Iowa, New Hampshire, North Carolina, Ohio and Pennsylvania. Together they total 112 of the 270 Electoral College votes needed to win the presidency.
Six of the eight had jobless rates in November, the last month the figures are available, that were below the national rate. The exceptions are Florida, where the unemployment rate was 10 percent, and North Carolina, where it was 10.4 percent. With the exception of Arizona, Obama won those states in 2008. Only Pennsylvania and New Hampshire went to the Democratic candidate in 2004.
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