Voter Pessimism on Economy May Blunt Obama’s Better Jobs Picture
It may become a bit easier to find a job just as President Barack Obama campaigns to keep his own.
A series of economic reports points to a pick-up in hiring as the election year opens, potentially easing a central source of voter discontent with the incumbent president.
Still, public pessimism about the U.S. economy has become so entrenched that it’s likely to limit the political benefit to Obama, said Dennis Jacobe, chief economist for the Gallup Poll.
“We may see a creeping improvement but there’s still going to be a huge percentage of Americans who are going to say the economy’s getting worse rather than better,” Jacobe said.
Democratic strategists say any sustained improvement in hiring would bolster the president’s re-election chances.
“Right now, the perception that his economic policies have not turned things around is holding back his support,” said Tad Devine, a senior strategist for the Al Gore and John Kerry presidential campaigns. “If people see light at the end of the tunnel, that light is going to be very beneficial to the president.”
The Standard & Poor’s 500 Index (SPX) gained 0.3 percent and the Dow Jones Industrial Average climbed 45.33 points, or 0.4 percent, to 11,868.81 in New York time yesterday as investors read the report as a sign the economy is strengthening.
An accumulation of positive employment data “suggests that hiring activity has picked up to the best rate so far in the economic recovery,” Andrew Tilton, a senior economist at Goldman Sachs Group Inc. (GS), said in a note to clients.
Manpower Inc.’s quarterly survey of large companies, released Dec. 13, showed hiring intentions at their highest level since 2008. A monthly survey by the National Federation of Independent Businesses, released the same day, showed small- business hiring plans also at the highest levels in three years.
The unemployment rate in November dropped to 8.6 percent, the lowest since March 2009, from 9 percent the month earlier.
Tilton said even with recent progress, hiring has “a lot further to improve” to reach the pace typical of a robust economic recovery. The economy also remains vulnerable to shocks such as a deterioration of the European debt crisis, he said.
Some economists were more optimistic.
“It looks like Christmas is coming after all this year for the economy,” Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi UFJ, said in a note to clients. He forecast the jobless rate will drop to 7.2 percent by late next year.
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. In 1984 Ronald Reagan won a second term with the rate on Election Day at 7.2 percent, having dropped almost 3 percentage points in the previous 18 months.
Any improvement in the coming months will be too little, too late to help Obama, said Republican pollster Ed Goeas.
Goeas said it typically takes at least six months of “solid growth on all fronts” to shift voter perceptions of the economy. Even if job growth improves that may well push up the election-year unemployment rate as discouraged workers return to the labor force, he said. Jobless workers are only counted as unemployed if they are actively seeking employment.
After the longest period of unemployment above 8 percent since the Great Depression, public perceptions of Obama’s performance are ingrained, Goeas said. Sixty percent of Americans disapprove of his handling of the economy, according to a CBS/New York Times poll conducted Dec. 5-7.
“Minor changes in the economic climate are not going to undo those deep-rooted feelings the public has about the president,” Goeas said.
Sixty-seven percent of Americans say the economy is getting worse, according to Gallup’s most weekly tracking poll, conducted Dec. 5-11. That is down from a peak this year of 78 percent who said so Aug. 8-14, following the debt-limit standoff between Obama and congressional Republicans that brought the country to the brink of default.
Devine, the Democratic strategist, said the faster flow of information and analysis in the age of the Internet and 24-hour cable television news can shift public perceptions quickly.
People also understand that the 2008 financial crisis was an event unprecedented since the Great Depression, Devine said. As a result, he said, voters won’t demand to see a more typical improvement after a recession to re-elect the incumbent.
Any improvement in the job situation will make it easier for Obama to attack Republican policies as a “risky” return to the approach of the George W. Bush administration, Devine said.
“The risks of moving away from his policies grow enormously, and I think the one thing that’s true of voters and investors at this point is they have become risk averse,” Devine said.
The key is persuading voters that the economy is moving in the right direction, Devine said.
“It comes down to two simple things: whether people think things are changing and getting better,” Devine said. “If that happens, it just changes the whole mood of the electorate. People begin to see the past differently and the future.”