Jan. 23 (Bloomberg) -- Just as the world’s largest economy is finally getting better, the public’s opinion of President Barack Obama’s handling of it is getting worse.
The U.S. economy wrapped up its best six-month performance since the recession ended, according to estimates by economists at Goldman Sachs Group Inc. and Morgan Stanley. And the jobless rate is below 7 percent for the first time since 2008.
Yet Obama will carry into next week’s State of the Union address weakening approval ratings on the economy. What’s happening, Republicans and some Democrats say, is that voters left behind in the recovery now blame him and not his predecessor, George W. Bush, and could punish Obama’s fellow Democrats in this year’s congressional elections.
“At some point, the president is going to start owning the economy,” said Simon Rosenberg, president of NDN, a Democratic-leaning research group. “It could be we’re at that point.”
In a Bloomberg National Poll last month, 58 percent of Americans disapproved of Obama’s economic stewardship, his worst showing since September 2011. Surveys by the Wall Street Journal/NBC News and Quinnipiac University show similar results.
At the root of the dissatisfaction are flat-lining household income and a jobs market that still hasn’t fully recovered from the worst recession in seven decades.
The contrast between improving growth and deteriorating presidential approval frustrates some White House allies, who say Obama and Democratic House and Senate candidates need to convince voters things are looking up.
“The president and the Democrats have to do much more,” Rosenberg said. “They have to make the case better. They’re losing the argument.”
The issue is more than political. For many families, the recovery doesn’t feel much different than the recession. Real median household income of $51,000 is 8 percent lower than in 2007. Almost 4 million people have been out of work for more than six months, three times the pre-recession average. One-third of black men aren’t even in the labor force, the highest mark since records began in 1972. And there are fewer people with jobs in the U.S. today than six years ago.
Amid such distress, voters give the president little credit for the economic turnaround since March 2009 that’s reflected in the gain of some 170 percent in the Standard & Poor’s 500 index.
One indication of Obama’s limited coattails came last week during a presidential visit to North Carolina, where he toured a manufacturing-innovation institute.
Democratic Senator Kay Hagan, who faces a tough re-election fight in a state with 7.4 percent unemployment, opted to remain in Washington rather than accompany the president.
By 49 percent to 41 percent, voters now blame “policies of the present” rather than “policies of the past” for their economic problems, a reversal from a year earlier, according to David Winston, a Republican pollster.
Black Americans, Obama’s most loyal supporters, are among the hardest hit by the uneven recovery.
Curtis Clark, 56, of Detroit lost his $32,000-a-year job as a records clerk for an accounting firm two-and-a-half years ago. His unemployment benefits ran out in January 2013, and he has tapped his retirement savings to pay the bills. Less than one-third of his $100,000 lump-sum payment remains.
Clark was among the almost 20 percent of black workers who were unemployed at some point last year, according to the Economic Policy Institute. Though he remains an Obama supporter, he’s frustrated with political bickering in Washington.
“I would like to see the unemployed people not treated as a stigma,” he said. “It’s not like it’s our fault. You got to help the people or else nothing’s going to work.”
The economy created just 74,000 jobs in December. Only 62.8 percent of working-age Americans are employed or actively seeking work, the lowest mark since February 1978.
A mix of baby boomer retirements and job-seeker discouragement is behind the slump in labor force participation, economists say.
An April, 2013 Boston Fed study blamed “cyclical factors” for the labor-participation decline since 2007. A later study by economist Shigeru Fujita of the Philadelphia Fed concluded that retirements of baby boomers -- those born between 1946 and 1964 -- explained the entire drop since the first quarter of 2012.
“It is misleading to attribute the decline in the unemployment rate in the last few years to discouragement,” Fujita wrote.
Jim O’Sullivan, chief U.S. economist for High-Frequency Economics, says the data are puzzling. The participation rate dropped in the past six months as much as it did in the previous 21 months even as other indicators flashed improvement. An index of small businesses reporting hard-to-fill job openings is at its highest level since January 2008, when the jobless rate was 5 percent, showing workers are in demand.
“Why would they be dropping out?” O’Sullivan said. “The labor market is clearly better than 12 months ago. It doesn’t make sense.”
The government says the number of “discouraged workers” - - those not looking for work because they believe none is available -- was 151,000 lower in December than a year earlier.
Still, the jobs being created are disproportionately in low-wage sectors, such as hospitality. Half the 2.2 million jobs generated last year were in occupations with wages that didn’t keep pace with inflation, according to an analysis by Daniel Alpert, managing partner at Westwood Capital LLC in New York.
For Republicans, there’s opportunity -- and peril -- in the labor force erosion.
“The president’s taken his eye off the ball,” House Speaker John Boehner said on Jan. 14. Republicans will campaign this year on jobs and Obama’s health-insurance overhaul, Boehner told reporters.
The botched introduction of the government’s health-care website has prompted voters to reassess Obama’s policies across the board, pollster Winston said.
“Health care is the tip of the iceberg, but the rest of the iceberg is the economy,” he said.
The danger for Republicans is that they’ve resisted moves to address the plight of the jobless. Senate Republicans last week blocked a $6.4 billion extension of unemployment insurance for 1.3 million people whose benefits had expired.
Winston says an annual party retreat at the end of this month may fill in the blanks.
That would be welcome news for Karl Walden, 56, a former preschool manager in Bridgeport, Connecticut. Both he and his wife, Carmen, a mortgage executive, lost their jobs 17 months ago. She returned to work after seven months. Karl, who cares for his octogenarian mother and uncle, says he has applied for about 300 positions and has gotten five interviews.
He’s enrolled in a program called Platform to Employment, a public-private partnership that helps the long-term jobless find work by providing training and temporary wage subsidies.
“They’re telling me just be patient, things will get better,” he says. “But it’s tough to be patient.”
There are reasons for optimism. Despite December’s disappointing employment report, companies last year created more than 180,000 jobs per month. The economy has been growing at or above its historical trend for the past three months, according to the Chicago Fed National Activity Index.
Previous bursts of strength have fizzled, however, so Obama, who delivers his State of the Union message on Jan. 28, walks a fine line in his public remarks. He takes credit for rescuing the economy from the recession and predicts this could be a “breakthrough year” while acknowledging the plight of those still idle.
“The economy’s improving,” he said at the White House last week, “but it can be improving even faster.”
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