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Saturday, November 3, 2012 - Page updated at 09:30 p.m.
Positive jobs report not likely a game-changer in election
By Don Lee
Tribune Washington bureau
WASHINGTON — The final major economic report before Election Day, showing that employers added a solid 171,000 new jobs in October, may not change many minds, but it does suggest that whoever wins the presidency Tuesday could enjoy increased economic momentum heading into next year.
Businesses stepped up their hiring last month, and more people jumped back into the job market, signs the economy is picking up steam even as unemployment remains high.
Job numbers expanded across a broad range of industries, including the long-depressed construction sector. That part of the economy should get a further lift in the next couple of months from rebuilding after the devastating storm that hit the East Coast this week.
What's more, statistics indicated that payroll growth in the past two months had been sharply higher than previously thought. Revisions in the numbers boosted optimism among economists that the nation's job-creation machine could kick into higher gear.
The jobless rate rose to 7.9 percent, from 7.8 percent in September, but that wasn't because of swelling ranks of unemployed workers, but rather gains in the number of people returning to the labor market, a positive sign that workers may be feeling more confident about job prospects.
But the stronger-than-expected jobs report Friday from the Labor Department isn't likely to have a huge impact on the presidential vote.
The numbers were not eye-poppingly different from last month; most voters already have made up their minds about the economy and more than 25 million Americans have cast ballots, closing in on one-fifth of the likely turnout.
Nonetheless, the report, along with other recent indicators showing improvements in the housing market and consumer confidence, does suggest smoother sailing for whoever wins, though the looming possibility of a sudden increase in taxes and reduction in government spending come Jan. 1 continue to act as a drag on the economy.
"The U.S. economy is beginning to find its rhythm," said Mark Zandi, chief economist at Moody's Analytics.
But he noted that if lawmakers fail to avert the so-called fiscal cliff — the automatic tax increases and spending cuts set to take place — "the improvements of the past few months will be quickly unwound."
Sticking to their scripts
Heading into the final weekend before the election, President Obama and challenger Mitt Romney stuck to their scripts in responding to the report.
The Obama administration noted that the economy has steadily climbed back from the extraordinarily deep recession with, now, 32 months of private-sector job growth. Romney and his Republican backers turned the spotlight on the still-high unemployment rate as an indication of what they see as ineffective policies under Obama.
The unemployment rate was 7.8 percent when Obama took office in January 2009, and it rose to a high of 10 percent in October of that year before slowly coming down. The rate fell below 8 percent in September for the first time since Obama's inauguration, but the tick up to 7.9 percent last month was just enough to give Romney a fresh attack line Friday.
"Unemployment is higher today than when Barack Obama took office," Romney told thousands gathered at a state fair pavilion in West Allis, a suburb of Milwaukee. "Today's increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill."
Romney argued that as a business executive and former governor of Massachusetts, he has the leadership skills to lead the country out of its economic doldrums.
"When I am elected, the economy and American jobs will still be stagnant. I won't waste any time complaining about my predecessor. ... From Day One, I will go to work to help Americans get back to work," he vowed.
His message to the crowd in Wisconsin, where Obama leads by 5 percentage points, according to the average of polls compiled by RealClearPolitics, was to consider what Obama hasn't done.
"Change cannot be measured in speeches; it is measured in achievements," Romney said. "Four years ago, candidate Obama promised to do so very much, but he has fallen so very short."
Obama spent the day in Ohio, emphasizing that the economy is growing and reminding voters in the state — where one in eight jobs is linked to the auto industry — of his support of the auto bailout. Romney in a 2008 op-ed article urged "Let Detroit Go Bankrupt."
Ohio's economy has improved in recent years, and its jobless rate has been below the national average.
Romney's campaign has been running a controversial ad in the state claiming Chrysler was sold to "Italians who are going to build Jeeps in China," leaving viewers to surmise that'll cost Americans jobs.
PolitiFact, an independent analyst, found the ad "ignores the return of American jobs to Chrysler Jeep plants in the United States, and it presents the manufacture of Jeeps in China as a threat, rather than an opportunity to sell cars made in China to Chinese consumers" and "strings together facts in a way that presents a wholly inaccurate picture."
Obama joined that chorus.
"You don't scare hardworking Americans just to scare up some votes. That's not what being president is all about," Obama said.
He added, "You know, in 2008 we were in the middle of two wars and the worst economic crisis since the Great Depression. And today our businesses have created nearly 5 1/2 million new jobs."
Those job gains don't constitute boom times.
"It wasn't a home-run kind of report," said Phil Orlando, chief equity strategist at Federated Investors in New York. "I wouldn't say the labor market is out of the woods."
Latest job increases
Still, the latest increases marked a continuing improvement from sluggish hiring last spring.
With 171,000 new jobs in October and upward revisions that added an additional 84,000 jobs to the August and September totals, employers have expanded their payrolls an average 173,000 a month since July. That's strong enough to absorb new workers coming into the labor market and to bring down the jobless rate, albeit slowly.
"Employment growth has kicked up a notch," said Heidi Shierholz, a labor economist at the left-leaning Economic Policy Institute.
She said the U.S. needs to create 9 million jobs to fill in the shortfall created by the downturn, and that, at this rate, the nation would not return to pre-recession unemployment rates until 2020.
The improvement in jobs amounts to "a good solid single in a game where we are 23 million runs behind," said Douglas Holtz-Eakin, president of the American Action Forum, a center-right think tank, and director of the Congressional Budget Office under President George W. Bush. "Any celebration about this would be a triumph of low expectations."
No president since Franklin Roosevelt has faced re-election with the unemployment rate as high as it is today, a fact that some have said bodes well for Romney.
But if there is a connection between the unemployment rate and the election outcome, recent history suggests it may have more to do with momentum in the jobs market than the rate itself.
Three times since 1980, an incumbent president faced voters when the jobless rate was more than 7 percent.
In the 1980 and 1992 elections, the incumbents, Jimmy Carter and George H.W. Bush, lost. The unemployment rate had been rising or flat across the 10 months preceding those elections.
In 1984, Ronald Reagan won. In that year, the unemployment rate had been sinking before the election, part of a steady two-year drop from a peak of 10.8 percent.
Material from The Washington Post and McClatchy Newspapers
is included in this report.
Copyright © The Seattle Times Company
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