Double Dose of Good Timing Aiding Obama's Re-Election Chances
Senior Features Editor
"The president's position has improved greatly due to the performance of the economy and the stock market," says Bill Frenzel, a 10-term, moderate GOP congressman from Minnesota, now with the Brookings Institution.
Similar circumstances helped Presidents Ronald Reagan and George W. Bush win re-election, but Obama may have an additional edge in that his Oval Office predecessors had recessions begin on their watch.
"From the beginning the odds were in his favor," says Robert Brusca, chief economist at FAO Economics. "The long recession started just before his term, and whatever happened in the first six months certainly had little of anything to do with his administration. The cards are now stacking up really nice for him."
The economy, though hardly hearty, grew at an annual rate of 3.0 percent in the fourth quarter of 2011, and is looking stronger on a broad scale than at any other time since Obama's election, say economists; and the stock market's long bull run, which petered out in the second half of 2011, was back on track in the first two months of the year.
The February jobs report issued Friday capped a week of encouraging economic data.
Many expect the trend to continue through the November election.
"The unemployment rate will be lower, employment will be back, manufacturing employment looks like its expanding for the first time in decades," says Lawrence White, a former White House economist and regulator who served under Democrats and Republicans and now a professor at NYU's Stern School of Business.
Of course, many analysts are quick to warn that Obama's momentum could be slowed or derailed by various events, such as Iran blocking the Straight of Hormuz, another eruption in the E.U. debt crisis or even $5 a gallon gasoline.
A closer look at the progression of the stock market, labor market and overall economy shows Obama will have ample positive comparisons to make without stretching the truth in the slightest.
Jobs, in particular, can be an Achilles' heel for incumbents, but like Bush in 2004, the Obama administration is overcoming the perception of owning a jobless recovery, thanks partly to what appears to be a structural change in the economic cycle.
"We’ve had job growth occurring well into the recovery in the last three recoveries," says Brusca, who adds that the bulk of job creation has shifted recently from manufacturing to services.
Jobs, Jobs, Jobs
Payrolls have increased 12-straight months for a total of 1.7 million jobs, and at 132,166,000 are now just 1.5 million below the February 2009 level of 133,652,000, Obama's first full month in office, according to Bureau of Labor Statistics data. The data wasreleased before Friday's unemployment report, which showed that 227,000 jobs were added in February while the unemployment rate held at 8.3 percent.
That's essentially how the labor market played out for Bush in the run-up to the November 2004 election.
What's more, if job creation continues at the 12-month average of some 142,000, more than 1.1 million jobs will be added by Election Day.
"He’s lucky that the recovery has taken so long, coming now rather than a year ago," says White.
"If we create 200,000 month, which is plausible, that puts him in a good position," says Dean Baker, co-director of the Center for Economic And Policy Analysis.
Baker's number may sound hypothetical, but many private-sector economists, including Brusca, expect average monthly job growth of that or more during the rest of 2012.
It's important too because the extra 400,000 jobs would essentially put payrolls where they were in Obama's early days.
"He will get credit for things going in the right direction," adds Baker.
The same dynamic and comparison appear to be at work with the unemployment rate.
Jobless Rate Math
Though the jobless rate remains high, its peak could be three years old by Election Day. The rate has not risen in the past 13 months.
During Bush's first term, though the jobless rate was much lower — it peaked at 6.3 per cent in June 2003 — it bounced between 5.4 and 5.8 in the ten months of 2004 leading up to the general election.
For Obama, however, steady modest, even minimal monthly improvement from the current 8.3- percent rate would take it to close to the 7.3-percent rate that existed when Reagan was re-elected in 1988 — the highest ever for an incumbent who won re-election — and roughly three full percentage points lower than its highest level of 10.2 percent.
"The rate of change makes a huge difference," says Baker.
Achieving a huge decline in the jobless, however, will require job growth uncommon in the past decade.
The Fed Factor
According to a new Federal Reserve Bank of Atlanta jobs calculator, lowering the jobless rate to 7.3 percent would require average monthly job creation of almost 280,000 in the eight months left before the election; the more likely 200,000 monthly average would reduce the rate to 7.7 percent.
The Fed Factor
Though economists say the comparisons with Bush are generally more apt, Obama and Reagan have one key element in common: a high profile, pro-active Federal Reserve chairman, whose policies have been blamed for some of the economy's failings.