The electoral politics of the jobs report

By Felix Salmon
October 5, 2012
wrote a bit about what you might call the bidirectional causality between the unemployment rate and incumbent political fortunes.

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Last month, I wrote a bit about what you might call the bidirectional causality between the unemployment rate and incumbent political fortunes. On the one hand, unemployment affects happiness, and willingness to vote for the current president. But on the other hand, the rate itself is a political weapon, to be used in, for instance, Republican claims of how many successive months America has had unemployment above 8%.
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This morning’s job report is fascinating, in that it illuminates both effects. One not-bad way of judging Obama’s odds of winning the election is to look at his odds on InTrade, which were stubbornly close to 60% for pretty much all of this year. Then, suddenly, in mid September, there was a huge surge. Narrowly speaking, the surge was a result of Obama doing well in important polls. But why were the polls suddenly turning so much in Obama’s favor? Journalists, with their bias towards believing that everything is a result of news, tended to attribute Obama’s newfound popularity to Romney gaffes like his 47% speech. But with hindsight, maybe news had very little to do with it. Maybe the real reason was that according to the household survey, the number of employed Americans grew by 873,000 in September alone.

Which isn’t to say that news is irrelevant when it comes to perceived election odds. For instance, within the first half-hour of the debate on Wednesday, Obama’s InTrade odds fell from 71% to 67%, just on the back of his weak performance. And then, this morning, they spiked right back up again, from 65% to 71%.
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This move is about optics as much as it is about reality: with the unemployment rate now below 8%, a key Republican talking point has been neutralized. And for the wonkier types, Obama can now say that he’s created more private-sector jobs in the past four years than George W Bush created in eight. Indeed, if it weren’t for public-sector job losses — exactly the kind of spending cuts that Republicans claim to love — the unemployment rate right now would have a 6 handle.

Those optics explain the frantic and ignoble conspiracy theories from the Republican side: they’re trying to alter perceptions of the number itself, even if they can’t alter the effect that rising employment has on the electorate’s propensity to vote for Obama. Because it seems as though rising employment is giving a significant boost to Obama’s re-election chances — and that from here on in, it will only be helped by the 7.8% headline unemployment rate. It’s a little bit depressing that 7.8% counts as low, for these purposes, but clearly it does — especially considering that it has come down 1.2 percentage points in the past year. I don’t know how much credit Obama can really take for that, but America, right now, seems to be willing to give him the benefit of the doubt.

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Comments
6 comments so far

Notice how the BLS report’s revisions to July and August have come dramatically closer (upward revision by 40,000 each month) to ADP’s?

Also notice how weekly hours in manufacturing is now at 40.6?

There are a lot of positives in this report, but the media’s not paying attention to anything but the headline unemployment rate and new jobs added in September — which could very well be revised upward to match ADP’s.

Posted by GRRR | Report as abusive

GRRR-

The media not paying attention to anything but headlines? Say it ain’t so?

If you asked the media to tell you 15 different things about the appearance of an elephant its answers would be “big”, “large”, “huge”, “giant”, “enormous”, et cetera.

I wouldn’t count on most reporters being able to walk and chew gum at the same time much less follow an argument that has more than two premises, or a report that has more than 1 fact.

Posted by QCIC | Report as abusive

” Obama can now say that he’s created more private-sector jobs in the past four years than George W Bush created in eight.”

Uh, Felix, he could say =that= back in January (or September of =last= year, if you admit that the Jan 2009 data was surveyed before Obama was inaugurated).

Then again, GWB’s Private-Sector job “growth” was -638K jobs. (If you use Feb 2001–the first survey under his leadership–as his baseline and admit that Jan 2009 was his.)

Posted by klhoughton | Report as abusive

@QCIC That’s not true – reporters are still very important and largely hungry and hard working. The problem is reporters aren’t on the 5 O’Clock news, nor the 6, nor the 7 or the late night wrap-up. It’s all tele-promters and phony commentators that know the players but not the game. Most written articles these days are cut-and-paste hacks spewing other people’s opinion too. My best advice is read TONNES of different material on any one subject everyday and make mental notes… within a couple of weeks (probably sooner) you’ll know who’s a hack and who’s a journalist. The Counterparties thingy is somewhat like that, but with too much NYT in my opinion

Posted by CDN_Rebel | Report as abusive

“The Counterparties thingy is somewhat like that, but with too much NYT in my opinion.” (QCIC)

More like too much FT and WSJ pay-walled stuff – at least we can read the NYT Leftist rants.

Posted by MrRFox | Report as abusive

I love the way the Republicans ran the economy into the ground under George Bush II and then blame the firemen who came along to stop the fire spreading and say it’s the firemen’s fault the workers can’t work in the building any more…

Posted by FifthDecade | Report as abusive
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