The economy added 244,000 jobs but the unemployment rate went up to 9 percent. Is this a political problem for President Obama — as the economy improves, more enter the workforce and the unemployment rate looks horrible?
It’s actually even worse than it looks. The unemployment rate went up because of a divergence of the surveys, not an increase in the number of people looking for jobs. In the household survey, which determines the unemployment rate, we lost 190,000 jobs in April, and only 15,000 new people entered the workforce. Hopefully, the two?????? surveys will both indicate robust job growth soon, but not this month.
There is certainly danger for the president in the number of discouraged workers who are not in the labor market. As they reenter, a rising unemployment rate will be a headline risk for the White House. But we have to start creating jobs on a robust consistent basis before that happens, and despite a good headline number today, we are still looking at a very mixed job market.
Is it the national unemployment rate that matters or the rate in individual swing states?
There is certainly more attention paid to the national rate than the individual states, but both are just statistics trying to measure the state of the economy. What really matters politically is how individuals perceive and experience economic conditions, both as a snapshot and directionally. To the extent that state numbers reflect that experience more accurately at the local level, they are important indicators to watch.
If we look at the battleground states as of the last state-level jobs report, Nevada, Florida, Michigan, North Carolina, Colorado and Ohio all have worse unemployment rates than the national average. If the president loses these, but wins all the other battlegrounds (Indiana, New Mexico, Pennsylvania, Wisconsin, Minnesota, Virginia, Iowa and New Hampshire), he loses reelection. Now of course, there are a lot of factors beyond the unemployment rate alone, but it helps give a sense of the economic challenge the president faces politically.
How many total jobs will Obama need to get the rate to 8 percent? to 7.2 percent?
Today, the president needed 189,000 jobs per month to get to 8 percent on Election Day, and he needed 247,000 to get to 7.2 percent. These are the number of jobs needed in the household survey, and in the household survey this month we lost 190,000 jobs. So obviously, we missed the benchmark pretty badly. The other thing to note is that in our model, we assume labor-force growth of about 130,000 workers per month based on CBO projections. This represents college graduates and other new workers entering the labor force. This month’s report indicated that only 15,000 new workers entered the labor force, and seems to signal that there are still many discouraged workers out there.
The civilian employment ratio has not improved, and in fact it is now starting to tail downward again.
Chart Proving This
The U6 rate which is the broadest indicator of unemployment which includes unemployed, those working part time wanting full time work, and “discouraged workers” (those who have given up looking), is climbing upwards again.
Chart
Two things:
Firstly, our economy has to add thousands of new jobs each month just to keep pace with the growth in population, and the story is a bit more clear: Jobs might be growing, but well below the rate of growth needed to improve the unemployment situation.
Secondly, given the reduction is hours worked by each employed person, one could say we are becoming a nation of part time workers.
Chart
Makes it look like we are getting closer and closer to Jimmy Carter’s ”Misery Index.”
Been there, done that.
Not a fun time in my life.
Hey! Your topic posting, Curt, and Nan’s reply post, do not mention how many jobs were saved! I thought that was an important measuring stick for Obama. Am I wrong?