According to the New York magazine …
For the last year or so, though, the economy has stubbornly failed to cooperate, and pundits began to acclimate themselves to the assumption that President Obama was highly vulnerable, if not a dead man walking.
A few months ago, that scenario was looking almost certain.
Now it’s looking far less likely.
Oh really? 8.5% unemployement is a good thing?
I guess the logic is that extrapolating the the November to December change, we’ll be back to full employment in in about 5 years.
Maybe faster if more people can be encoraged (or is it discouraged?) enough to leave the work force?
But, let’s not quibble over the numbers.
The question is: will December’s 8.5% help or hurt President Obama’s re-election campaign.
Short-run, the President should get an approval bump from the unemployment rate headlines. That’s fair.
But, the new lower number may be an albatross in 2012.
Here’s why.
Still, much of the rate drop is attributable to folks who are unemployed and stopped looking for a job because either (1) they had holiday shopping to do (2) didn’t want to work as a retail clerk or FedEx warehouse grunt (3) like the idea of 99 weeks of unemployment checks, or (4) have flat out given up because the economy sucks so bad.
My view: the road to economic success is is not paved with people giving up hope and couch-sitting instead of job-hunting.
The unemployment rate is likely to move back up in 2012 because, historically, as the economy appears to be bouncing back, unemployed folks who aren’t looking for work re-enter the job market and start looking again. In other words, the unemployment rate may creep up because the denominator is getting bigger.
So, even if a modest recovery is taking place – something I don’t personally believe to be true – the labor market dynamics work against the President.
Pundits have been saying that Obama will be ok with a high unemployment rate in 2012 as long as the trajectory is in the right direction. That is, that unemployment is coming down.
Here’s my scenario, unemployment will creep back up and Obama will be facing a high unemployment rate that is rising.
That’s not good for the O-team.
Further, if Obama chest-pounds the 8.5% now, Congress has less pressure to “pass it now.” So, he may get less of his jobs bill through.
Politically, Obama might have been better off if the rate had stayed closer to 9% … he may be in the awkward position of having a high unemployment rate that’s going in the wrong direction.
It’ll be interesting …
The Homa Files 