Is January Jobs Report a Turning Point for Obama?

Is January Jobs Report a Turning Point for Obama?

Sean Trende
RealClearPolitics
February 3, 2012

The big news Friday morning was the monthly jobs and unemployment report. The government announced that the economy created about 250,000 new jobs in January -- the biggest increase in nine months -- and that the unemployment rate dropped to 8.3 percent.

Psephologists immediately jumped on the numbers, and there was initially a broad convergence in the commentariat: Both parties agreed this was good news for President Obama and bad news for Republican front-runner Mitt Romney. Republicans have since backed off, and are now pointing to various caveats in the data that suggest it isn’t as promising as initially thought.

My own reaction is pretty cautious. I think in terms of the November election, the data are quite inconclusive. I offer five basic observations:

1. The Republicans’ caveats are real, but . . . The two most important caveats raised by conservatives are that seasonal adjustments could have pumped up the numbers, and that the drop in unemployment over the past few months is largely the result of workers leaving the workforce.

These are arguably correct. Seasonality is simply the attempt by the government to “smooth out” the employment numbers by adjusting them for variations in the seasons. In other words, during the wintertime, job growth can be artificially stunted by things like layoffs following the holidays and inclement weather preventing people from going to work. The government tries to compensate for this by pushing the numbers upward in the winter (and downward in the summer). Given the relatively mild winter (it was 70 degrees here in Ohio a few days ago), this might not have been as much of a factor as is normally the case, and the government might have pushed things up too much. There’s probably something to this. The problem is, it’s difficult to know how much an estimate from seasonal adjustment is actually off. (If we knew, we wouldn’t use an estimator!)

A stronger objection is that the drop in the unemployment rate has largely been brought about by workers giving up on looking for jobs. The “missing” workers, oddly, have the same effect on the broad unemployment rate as workers who are hired. This really is why the rate has dropped two points from its peak, even though job growth has been continuously tepid.

2. It’s the perception that matters. In the end, though, I think nitpicking the numbers around the edges misses the forest for the trees, at least in terms of election analysis. That’s because the numbers themselves don’t matter. Very few people on the street, if asked to cite the unemployment rate, would likely be able to give a correct number, even within a few tenths of a point.

In the end, if the decline in the unemployment rate really is about people leaving the workforce, or if the seasonal adjustment is off, then people will see the headline number, recall their neighbor or brother who has been out of work for a month (or more), and mutter something about lies, damned lies, and statistics. The president will be able to run a 30-second ad bragging about the unemployment rate being lower than when he took office, but if it’s at odds with what Americans are actually experiencing, it won’t matter (and it could hurt).

Just remember that what we’re trying to do with these numbers is infer how the public thinks the economy is doing. This is usually a lagging indicator. Right now, the public still perceives the economy as doing pretty poorly, even after a couple of years’ expansion, and after past employment numbers that have been as strong as the ones announced Friday.

3. It’s the long-term trend that matters. Here we find perhaps the most troubling aspect of these figures for Obama. It’s nice to have a good number, but we’ve had them before. In February 2011, we added 220,000 jobs; in March we added 246,000 jobs; and in April we added 251,000 jobs -- before four straight months of sub-100,000 job growth.

In other words, there’s a possibility that the past two months have simply been noise and that we’ll revert to a rather unsatisfying mean shortly. On the other hand, perhaps the trend line really has shifted. While there are some good reasons to suspect that it has, we simply can’t know that right now. This isn’t a particularly satisfying answer for people who want to know today how things will turn out in November, but it’s the correct answer.

4. There are some real problems facing the economy in the next few months. We should recall that there are some very real headwinds blowing offshore that could scuttle the whole venture. The most commonly discussed one is Europe, which has been teetering near the edge of a collapse for quite some time now. But the more ominous one, to my mind, is gas prices. If they rise to $5 a gallon this summer, as some have predicted, it could wreck the economy, and would wreck the president’s approval ratings (as, I believe, they did last summer). Ironically, an improving economy makes a gas price spike more likely. And of course, if Israel attacks Iran, batten down the hatches.

5. This is still something the president needed, badly. We should still be careful not to sell Obama short here. As I mentioned in point two of this article, the growth in the economy from April through December, while real, simply hasn’t been enough to get the president re-elected. The trend line needed to shift for him to get across the finish line first in November.

In other words, while a month of 250,000 jobs added isn’t sufficient to get the president re-elected, it was necessary. We should realize that this isn’t exactly the 1.1 million jobs added in September 1983, but it is absolutely an important first step for Obama to get back into the 2012 race.

Addendum: One other late-breaking thought. We should also be careful to remember that the economy isn't everything. In 2010, the economic-based models of congressional elections predicted Democratic losses between 25 and 45 seats. The results were . . . otherwise. How you think the non-economic variables factor in this cycle is a subjective assessment that would take several other articles to work through. We should nevertheless remember that they are real, significant and numerous.

You know what's puzzling here, and what the MSM are not mentioning (naturally), are the RAW BLS numbers for December 2011 and January 2012.

The raw BLS numbers showed that there were 132,952,000 jobs in December 2011, and in January 2012 there were only 130,400,000 jobs, that's a LOSS of 2 1/2 MILLION JOBS!!! And yet somehow, after this mysterious "seasonal adjustment" we are told that we ADDED 257,000 jobs and unemployment is down???

How the hell does THAT work???

Anyone else smell a rat here?

dblboggie wrote:You know what's puzzling here, and what the MSM are not mentioning (naturally), are the RAW BLS numbers for December 2011 and January 2012.

The raw BLS numbers showed that there were 132,952,000 jobs in December 2011, and in January 2012 there were only 130,400,000 jobs, that's a LOSS of 2 1/2 MILLION JOBS!!! And yet somehow, after this mysterious "seasonal adjustment" we are told that we ADDED 257,000 jobs and unemployment is down???

How the hell does THAT work???

Anyone else smell a rat here?

Yeah, of course. They throw out these numbers as soon as it's predicted that the unemployment numbers will go up and they don't count the millions who aren't in the workforce.

dblboggie wrote:You know what's puzzling here, and what the MSM are not mentioning (naturally), are the RAW BLS numbers for December 2011 and January 2012.

The raw BLS numbers showed that there were 132,952,000 jobs in December 2011, and in January 2012 there were only 130,400,000 jobs, that's a LOSS of 2 1/2 MILLION JOBS!!! And yet somehow, after this mysterious "seasonal adjustment" we are told that we ADDED 257,000 jobs and unemployment is down???

How the hell does THAT work???

Anyone else smell a rat here?

Interesting article with lots of graphs to support what you said........

Those Not in Labor Force Rose an Amazing 1,177,000
http://finance.townhall.com/columnists/mikeshedlock/2012/02/04/those_not_in_labor_force_rose_an_amazing_1177000

Basically, it's the media picking it's winner again (Obama) while ignoring other evidence. You can best believe that if this had been Bush, these numbers would have already bee trumpeted out like the Townhall article did.

TexasBlue wrote:

dblboggie wrote:You know what's puzzling here, and what the MSM are not mentioning (naturally), are the RAW BLS numbers for December 2011 and January 2012.

The raw BLS numbers showed that there were 132,952,000 jobs in December 2011, and in January 2012 there were only 130,400,000 jobs, that's a LOSS of 2 1/2 MILLION JOBS!!! And yet somehow, after this mysterious "seasonal adjustment" we are told that we ADDED 257,000 jobs and unemployment is down??

How the hell does THAT work??

Anyone else smell a rat here

Interesting article with lots of graphs to support what you said........

Those Not in Labor Force Rose an Amazing 1,177,000
http://finance.townhall.com/columnists/mikeshedlock/2012/02/04/those_not_in_labor_force_rose_an_amazing_1177000

Basically, it's the media picking it's winner again (Obama) while ignoring other evidence. You can best believe that if this had been Bush, these numbers would have already bee trumpeted out like the Townhall article did.

Very good point Tex! I submit that the BLS table on "Household Data - Table A-15 - Alternative Measures of Labor Underutilization - row U6" which puts "seasonally adjusted" (whatever the hell that actually means) unemployment rate at 15.1% - is MUCH closer to our actual unemployment rate than that bullsh*t stat being trumpeted by Obama and his lackeys in the MSM.

We are being fed a line of BS by the MSM, small surprise that, eh?

dblboggie wrote:We are being fed a line of BS by the MSM, small surprise that, eh?

When the jobs report came out and I read it, I knew it was skewed to begin with. It's not that I relish in a bad economy, but one has to look at many factors. That article points out those factors. Your statement from the BLS shows how blatant of a lie the media has committed.

A lot of the people who stopped trying looking for work, aren't being counted, so it looks like unemployment went down. So if those people say "Oh there's jobs out there now, I'm going to start applying" and millions apply to look for jobs and it will show once again that these millions of people are out of work, they're just not on record, but the media doesn't tell you that part.