The new unemployment numbers are out, and on first glance, it looks good for the economy and the president’s re-election.
Looks can, however, be deceiving.
The Bureau of Labor Statistics announced that unemployment slithered downward a tenth of one percent to 8.2%, while non-farm jobs rose by 120,000. Interestingly, the BLS referred to the rate as “little changed.” As it turned out, the UE survey (which is different from the job growth survey) reveals that the drop in the rate came largely from a drop in the labor force. The projected number of employed Americans in the UE survey actually fell by 31,000. Clearly, the spike in energy prices is having an effect (as it did in 2008, when UE rose from 5.1% in March to 5.6% in June).
I leave it to others to glean motives form the BLS reporting numbers (I tend to be more receptive to mere survey glitches than most; statistical projections are always weaker than they look). I will say this, however: this is the worst possible March result for the president’s re-election.
Here’s why: ever since World War II, the incumbent party has won the popular vote for president whenever unemployment falls between March and June of an election year. If unemployment rises from March to June, the incumbent party hast lost, every time. Making matters worse for the party in power during a shaky economy, college students usually are out of the labor market in March, but back in by June. An economy strong enough to absorb them will keep the rate below March levels and keep the incumbent party in power. An economy that can’t do that sends the incumbents packing.
If the March numbers are any indication, the recovery that seemed to pick up steam over the winter is now running on fumes. Depending on which survey one uses, job growth was either cut in half or erased. If it stalls now, just as voters begin their usual pre-election gauge of the situation, the president is, politically, toast.
We’ll all have a better idea come June (the economy is far more fickle than those of us who study it closely like to admit), but this report looks more like a warning than anything else.