Well, we’ve reached the end of this series that I started back in March. This was all inspired by a blog post by Nate Silver who suggested that the employment situation would be one of, if not the, most important factors in determining President Obama’s chances of victory. Silver proposed a “magic number” of 150,000 jobs per month, by which we could determine whether the president is a favorite or an underdog for re-election. Later, he also proposed a more optimistic number of 75,000 jobs per month, while Ezra Klein proposed 200,000 jobs per month as the break-even point.
Today’s report was a very good one, as the economy added a more-than-expected 171,000 jobs in October. Also, the previous two months were revised up to 192,000 and 148,000 from 142,000 and 114,000, respectively. Here is how our final graph looks:
As you can see, according to the graph and Silver’s prediction, Obama is a slight favorite to win re-election, which also happens to be essentially what all the pollsters show. If you agree with Silver’s “super optimistic” line, then Obama is more heavily favored.
I’ve said this with almost each one of these reports but I need to repeat it here: the argument here isn’t that voters will be checking these jobs numbers and then deciding how they feel about the president. No, the argument is that the job numbers are information on the health of the economy, and the health of the economy will determine how voters feel about the president. People seem to forget that each month, which leads to embarrassing tweets from guys like Jack Welch about Chicago cooking the numbers.
At any rate, the prediction made by Silver about how the jobs reports would reflect the president’s chances seems to have been borne out by all the latest polling, which indicates that the president is a clear favorite to win re-election by a small margin.
With each of these posts about the BLS reports, I have received messages or emails from conservative friends with objections to one thing or another. Early in the year, some conservatives insisted that Gallup’s numbers were more reliable because they were not seasonally adjusted. That talking point has died since Gallup shows a lower unemployment rate than the BLS. In fact, yesterday’s Gallup unemployment report pegs unemployment at 7.0% without seasonal adjustments. Where are my conservative friends who favor Gallup now?
Last month, my skeptical friends understandably asked how the unemployment rate could drop by 0.3% while only adding 114,000 jobs. This month they will (also understandably) be confused how adding 171,000 jobs results in an unemployment rate increase of 0.1%. The answer is that there are two different surveys producing the two different numbers. The jobs numbers are a result of polling businesses, while the unemployment numbers are a result of polling actual households. Last month’s drop of 0.3% was probably a bit of an outlier, and this month’s number is a small correction. (Also, the actual amount of the increase was 0.08%. Rounding! How does it work?)
The other oft-repeated (and valid) criticism of the jobs record is that the rate is dropping because of decreased participation in the workforce. That has been true in some previous months, but it is absolutely not true this month. Workforce participation increased by 578,000, which is a good sign. Previously discouraged workers have re-entered the workforce. This is real recovery; slower than we’d like, but real.
Mitt Romney released a statement that tried to accentuate the negative aspect of the report:
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill,” Mr. Romney said. “The jobless rate is higher than it was when President Obama took office, and there are still 23 million Americans struggling for work. On Tuesday, America will make a choice between stagnation and prosperity.”
Aside from appearing to be rooting against recovery, Mr. Romney’s statement is just not factually true. The economy is recovering, whether that is inconvenient for him or not. I guess you can’t really blame him for looking so hard for the empty part of the glass; he’s running for office, for Pete’s sake.
So will this latest report have any effect on the election? Probably not. It’s not really out of the range of expectations, and it more or less cements the existing perception as to the direction of the economy. President Obama remains a favorite to win on Tuesday, by a small margin.
I’ll take it.