If you think you heard a loud cheer around 8:30 E.T. this morning, you were right. It came from 1600 Pennsylvania Avenue, where Super Bowl weekend started early—at just about the moment when the Labor Department announced that the unemployment rate fell to 8.3 per cent in January.
Of course, once they had almost busted their lungs screaming “touchdown,” the President’s men tried to put a sober face on things. “Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression,” Alan Krueger, the chairman of the Council of Economic Advisors, said in a blog post that was carefully modulated to avoid the appearance of gloating. “It is critical that we continue the economic policies that are helping us to dig our way out of the deep hole that was caused by the recession that began at the end of 2007.”
C’mon, Alan! Loosen up a bit. Everybody knows that the unemployment rate will be the biggest determinant of the election, and it’s now down to its March, 2009, level. If January’s rate of hiring continues—the economy added two hundred and forty-three thousand jobs—then within a few months the jobless rate will drop below 7.8 per cent, which is where it stood when Obama took office.
At that point, it will be tough for Mitt Romney to stand up and say the President’s policies have made the recession worse. And it will be impossible for Republicans to deny that things are getting better. Actually, some of them have already dropped that pretense. In a statement this morning, John Boehner, the Speaker of the House, said the jobs report was “welcome news” before adding, “We need to do better.”
That is certainly true, but is it a big enough indictment to turf out a first-term President, something Americans have historically been very reluctant to do? I doubt it, and so do many other people. On Intrade, the political betting market, the implied probability of Obama winning in November jumped by more than two per cent this morning. It now stands at about fifty-seven per cent.
As I said last month, when the unemployment rate fell from 8.6 per cent to 8.5 per cent, the improvement in the labor market presents a particular dilemma to Romney, who has based much of his campaign on the idea that he is the one to get America back to work. Only yesterday, in his appearance with Donald Trump, he said, “I want to do everything in my power to get this economy going again.”
Earth to Mitt: Have you been reading the recent jobs reports?
This one showed that private-sector employers created two hundred and fifty-seven thousand jobs in January, and that hiring picked up across many sectors of the economy: manufacturing, construction, leisure and hospitality, health care, and business services. About the only sectors not hiring were the financial industry and the government: public-sector employment fell by fourteen thousand in January.
A couple of months ago, when the Labor Department announced that the unemployment rate had fallen from 9.0 per cent to 8.6 per cent in November, I noted that a single month’s job figures shouldn’t be taken too seriously. But we have now had three strong reports in a row—a sure signal that the economy is strengthening. And this month’s report actually revised up the job figures from previous months. According to the latest figures from the Labor Department, employers created a hundred and fifty-seven thousand jobs in November and two hundred and three thousand in December.
You don’t have to know much about economics or statistics to see things are picking up: a hundred and fifty-seven thousand, two hundred and three thousand, two hundred and forty-three thousand—that series of figures is increasing. And other statistics confirm the positive picture. The Commerce Department reported today that factory orders rose again in December. For 2011 as a whole, they jumped by more than twelve per cent as automakers and other manufacturers had a banner year. Outside of finance and residential real estate, most sectors of the economy have seen a meaningful rebound in business since the recession officially ended, in June, 2009.
Is everything hunky dory? Of course it isn’t. About 12.7 million Americans are still out of work, and 5.5 million of them have been jobless for more than six months. Some groups still have very high unemployment rates: teen-agers—23.2 per cent; blacks—13.6 per cent; Hispanics—10.5 per cent. And if you add in people who say they want a job but have stopped looking and those working part time for economic reasons, the overall rate of “under-employment” is still 15.1 percent.
But that figure is ticking down, too.
On Wall Street, the traders have a saying: the trend is your friend. The same thing applies to politics. As I noted in December, “The U.S. economy appears to be heading in the right direction. Which for President Obama and his Republican rivals is potentially very big news.” Two months on, the only change I would make to that statement is to take out “potentially.”