Two years ago the unemployment rate was 9.9 percent. Now it's 8.5 percent. At first blush that's good news for the president. Actually it may not be.
Voters pay more attention to the direction the economy is moving than to how bad or good it is. So if the positive trend continues in the months leading up to Election Day, Obama's prospects of being reelected improve.
But if you consider the number of working-age Americans who have stopped looking for work over the past two years because they couldn't find a job, and young people too discouraged even to start looking, you might worry.
The Bureau of Labor Statistics, which measures the unemployment rate every month, counts people as unemployed only if they're looking for work. If they're too discouraged even to enter the job market, they're not counted.
If all the potential workers who have dropped out of the job market over the past two years were counted, today's unemployment rate wouldn't be 8.5 percent. It would be 9.5 percent. That's only a bit down from the 9.9 percent unemployment rate two years ago.
The genuinely good news, though, is the Bureau of Labor Statistics also tells us 200,000 new jobs were added in December. Granted, this doesn't put much of a dent in the 10 million jobs we've either lost since the recession began or needed to keep up with the growth of the working-age population (at this rate we won't return to our pre-recession level of employment until 2019) but, hey, it's at least the right direction.
But here's the political irony. This little bit of good news is likely to raise the hopes of the great army of the discouraged -- many of whom will now start looking for work.
And what happens when they start looking? If they don't find a job (and, let's face it, the chances are still slim) they'll be counted as unemployed.
Which means the unemployment rate will very likely edge upward in coming months. This will be bad for the President because it will look as though the trend is in the wrong direction again.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Follow Robert Reich on Twitter: www.twitter.com/RBReich
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 |
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| Obama | Romney | |
|---|---|---|
| Electoral Votes (270 to win) |
332 | 206 |
| Obama | Romney | |
|---|---|---|
| Total | 65,899,660 | 60,932,152 |
| Percent | 51.1% | 47.2% |
| Democrats* | Republicans | |
|---|---|---|
| Current Senate | 53 | 47 |
| Seats gained or lost | +2 | -2 |
| New Total | 55 | 45 |
| Democrats | Republicans | |
|---|---|---|
| Seats won | 201 | 234 |
The good news is, he will be gone a year from now. Economys heal themselves over time, it takes a long time, but that was the message form the last failed Keynsian experiment starting in the 1930's and didn;t end until the late 1940's.
BTW, the rate would not be 9.5% as written in the article, it is actually 9.1%.
But let's take it a step further. Obama can play the "A New Hope" angle. Unemployment increases because the discouraged have found new hope in the job market. Renewed confidence can make the economy begin to spiral up instead of down. Beating up on increasing unemployment at such a time would undermine that confidence, and the new hope of recovery it represents.
Few businesses claim that less regulation is more important to them than customers, Less regulation would be appropriate in some cases, but it is not the all-consuming problem that conservative propaganda claims. Some key regulations, and many new ones, are necessary to counter failures in the private sector that threaten not just the economy, but the air, the water supply, and the food supply.
We do need to develop domestic renewable energy sources and cut into the trade deficit, but I get tired of the divisive "anti-business" lie. Conservatives have driven business uncertainty to the point of stalling the recovery.
Hate to break it to an Austrian school beliver facts exist and so does historical data which disproves your theory.
Supplyside economics has failed and always will.When making money and producing nothing and employing few people is more important than making real things that real people buy and employ many people you will end up where the US and Uk are in a big dirty mess
I come back to the point that if lowering taxes and throwing out regulations led to great job creation why did it not happen during the prior decade.
The advocates of austerity and budget cutting in the face of high unemployment are just following their theory.