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Alan Kohler
Alan Kohler is one of Australia’s most experienced commentators and journalists. Alan is the founder of Eureka Report, Australia’s most successful investment newsletter, and Business Spectator, a 24-hour free business news and commentary website. He also hosts Inside Business, a half-hour Sunday programme on the ABC, is the finance presenter on the ABC News - and producer of the nightly graph (or two).
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Obama's volatile job prospects

Steve Kornacki, Salon.com9 Apr 2012, 10:31 AM

A disappointing US jobs report is a reminder of how much Obama's election prospects hinge on employment data, and how shaky the president's hold on his position is.

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In a way, the new jobs report released over the weekend contained good news for President Obama’s re-election campaign, with the unemployment rate dropping from 8.3 to 8.2 per cent in March – bringing it to its lowest level since January 2009, when George W. Bush left office.

But, as Salon writer Andrew Leonard explained earlier, the underlying numbers are discouraging. Far fewer jobs were created in March than expected, and there are hints that consumers are pulling back on their spending. It’s possible that the momentum of the last few months is stalling out, or even that it was a mirage. It’s also possible that the new data is a blip, and that the coming months will bring more robust job growth.

Not surprisingly, Mitt Romney has already pounced on what he called a "weak and very troubling jobs report,” while Obama used a morning event to emphasise the positive aspects of the report, acknowledging only that "it’s clear to every American that there will still be ups and downs along the way and that we’ve got a lot more work to do.”

The March report is a reminder of the degree to which Obama’s second-term prospects hinge on the public’s perception of the economy. Starting last October, every report for six months was widely interpreted as positive news. Americans began hearing that the jobless rate was declining and that job growth was taking place at an unexpectedly quick pace. It doesn’t seem coincidental that in the same period Obama’s job approval numbers and his standing in general election trial heats improved markedly.

If the latest jobs report is the start of a new and gloomy trend, it couldn’t come at a worse time for Obama. Here the example of the last president to be denied a second term looms large.

At this point in the 1992 campaign, George H.W. Bush’s approval ratings were lower than Obama’s now are, stuck in the low 40s, or even in the high 30s on a bad day. But he and his team were optimistic that the economy was finally recovering from the early-1990s recession and that voters would feel it by Election Day. Growth for the first quarter of 1992 was measured at 2.7 per cent – the best performance since early 1989. Bush’s team was also confident because the presumptive Democratic nominee, Bill Clinton, was saddled with seemingly lethal personal unfavourable scores, the result of several primary season scandals.

But the second quarter of ’92 brought an onslaught of awful economic news that probably sunk the Bush campaign. After holding steady for the first few months of the year, unemployment jumped to 7.5 per cent in May and soared to 7.8 in June. Growth slowed to 1.4 per cent. This came as Bush was confidently declaring that "We’ve been through the longest, dragged, dragging, recession in history” and that "We’re in recovery now.” And it prompted his campaign to panic and change gears, as this New York Times story from early July ’92 indicates:

"Shaken by an ominous jump in the unemployment rate, White House strategists said today that they were reassessing the assumption that an improving economy would revive President Bush’s political standing before the November election. Instead, they said, they must focus their campaign more on social problems and character issues.

"The change in emphasis had been under serious discussion since late last month, but it was propelled Thursday, when it was reported that the June unemployment rate had surged to 7.8 per cent. The shift in strategy portends a tougher and possibly more negative re-election effort by Bush than he or his advisers had predicted."

Interestingly, the economy did seem to improve after that low point. Unemployment ticked down to 7.6 per cent in August and September, and fell to 7.3 in October (although that report wasn’t released until after the election). And the week before the election, Bush actually received some of the most encouraging news of his presidency, with growth jumping back to 2.7 per cent (it was later revised up to 3.9 per cent), but the public had long since tuned him out. The country’s economic anxiety, high to begin with, seemed to cement during the disastrous second quarter.

This year, the October jobs report will be released before the November election. Maybe a strong report then (and a few other strong reports in the fall) will be enough to save Obama. But Bush’s example is a reminder that it can take a while for good news to register, and that elections can be lost long before Election Day.

This article first appeared on Salon.com. Republished with permission.

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Stephen Bartholomeusz 3 hours ago | 5
When Ben Bernanke finally makes a substantial call on the future of QE, the question is just how widespread the ruptures will be from shifting markets.
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Brett Cole 5 hours ago | 1
Morgan Stanley says those who have shorted copper may see the fundamental turn on them.

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