WSJ: Analysts predict 7.7% unemployment by November 2012

posted at 2:55 pm on March 14, 2011 by Ed Morrissey

The midterm elections turned into a referendum on the economy, the budget, and ObamaCare.  Democrats lost their House majority and substantially weakened their Senate majority by spending the 111th Session ignoring the first, refusing to deal with the second, and spending about half of their time passing the third despite widespread opposition to the bill.  Meanwhile, joblessness continued without much attention until the election rolled around, and the 9% jobless rate sealed the doom of Nancy Pelosi, if not Harry Reid.

What will unemployment be at the next election, and how will it impact voters in 2012?  The Wall Street Journal surveyed economists and found that an average of their projections will put it at 7.7% when voters go to the polls:

The U.S. jobless rate will be 7.7% in November 2012, the highest level for a presidential election month since Jimmy Carter defeated Gerald Ford in 1976, according to the average forecast of economists in the latest Wall Street Journal survey.

That rate is well below the 8.9% reported by the Labor Department for February, but still remains high as economists expect job gains to come slowly. “The labor market is a scar that will be slow to fade,” said Sean M. Snaith of the University of Central Florida.

On average, the 54 respondents—not all of whom answer every question—forecast the jobless rate will be 8.8% in June and 8.4% in December of 2011. They forecast the U.S. economy will add about 190,000 jobs a month over the next year—an improvement from the depressed level of job creation so far in this recovery, but still too low to bring the unemployment rate down quickly.

While the 7.7% rate in November 2012 would be the highest in seven presidential election cycles, analysts point out that it is often the overall trend—rather than the level of joblessness—that determines an incumbent’s fate. President Carter was defeated in 1980 by Ronald Reagan when the unemployment rate was 7.5%, lower than the level when he was elected but up from 5.6% earlier in his term. Meanwhile, President Reagan was re-elected in 1984 with the rate at 7.2%, but that was down sharply from the peak of 10.8% recorded in 1982.

A few caveats are in order in this analysis.  First, nothing here accounts for the civilian participation rate in the workforce, which has dropped to 64.2%, the lowest since 1982.  If that stays the same, then 7.7% won’t be as beneficial as it sounds, since it will mask a much higher drop in actual employment in relation to the population than the overall rate would indicate.  During the last expansion, that number was up to 67.2% at its peak, which means that a significant number of people have dropped off the grid.  And if they decided to start looking for jobs again, their return will spike the jobless number upward considerably even if the economy is producing a significant number of new jobs by then.

Next, the issue of trending is important but not necessarily decisive.  One key part of the context will be that Barack Obama pledged that his $787 billion stimulus would prevent unemployment from going above 8% in the first place.  Instead, the money is gone and interest payments are bogging down the budget, and it will have taken 3+ years to get down to a level that Obama predicted we’d hit before then without the stimulus.  Regardless of who gets the Republican nomination, Obama’s challenger will beat that projection from Christine Romer at every campaign stop from the conventions to Election Day — as well as the White House’s “Recovery Summer” PR campaign from last year.

Also, trends become important when their impact can be felt as a trend.  Drifting from 8.4% in December to 7.7% in November won’t have the same impact as Reagan’s drop from 10.8% in 1982 to 7.2% in November 1984, especially since civilian participation actually improved during that period.  The difference in economic production was palpable and impressive, not drifting, gradual, and almost accidental.

Could Obama get re-elected with a 7.7% unemployment rate?  It’s certainly possible, but it’s not enough of an improvement to increase his chances.  It will likely depend on the Republican challenger, and how good a case he or she can build to convince voters that GOP leadership can provide better stewardship of the economy.  Right now, that’s not a difficult case to make.


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Comment pages: 1 2

Conservatives should be yelling about the “Real” number at about 22.1%

Remember, DON’T LET THEM HAVE THE NARRATIVE!!

MadDogF on March 14, 2011 at 9:49 PM

Fine. But that’s not going to take away the anger of those people who lost their businesses, went broke or into receivership. They’re still going to be really angry. these lost businesses they put thier hearts, souls and money into. These didn’t get unemployment. these just have to pick up and start all over under the umbrella of a government they’ll probably never trust again. There’s a larger story than just unemployment here.

jeanie on March 14, 2011 at 10:16 PM

Of course, if the Supreme Court does the right thing and declares Obamacare unconstitutional, unemployment just might go down. Obama would deserve none of the credit, but would probably get it anyway, just like Clinton did after the Republicans improved the economy by slashing his budget and voting Hillarycare down.

kscheuller on March 14, 2011 at 10:25 PM

Come on, the real issues are bullies and breast milk.

Dhuka on March 14, 2011 at 10:43 PM

. Obama would deserve none of the credit, but would probably get it anyway, just like Clinton did after the Republicans improved the economy by slashing his budget and voting Hillarycare down.

kscheuller on March 14, 2011 at 10:25 PM

Obamacare gone? Unemployment numbers improved? I would take it.

CWforFreedom on March 14, 2011 at 11:03 PM

Not exactly 7.7%, unless you exclude the underemployed who happen to vote as well.

Where are the republican leaders declaring the real unemployment numbers? The dems take full responsibility for this faulty economy.

dthorny on March 15, 2011 at 1:13 AM

Remember, DON’T LET THEM HAVE THE NARRATIVE!!

MadDogF
.
WE hammer this point every chance we get.
Plus 10.

Col.John Wm. Reed on March 15, 2011 at 8:34 AM

karenhasfreedom on March 14, 2011 at 7:38 PM

You are correct. They all said “Airhead incoming!” and cut personnel like mad. They did that because they knew Mr Present would tax the private sector to death to pay for his unicorns and rainbows.

dogsoldier on March 15, 2011 at 9:22 AM

Obama would deserve none of the credit, but would probably get it anyway, just like Clinton did after the Republicans improved the economy by slashing his budget and voting Hillarycare down.

kscheuller on March 14, 2011 at 10:25 PM

Obamacare gone? Unemployment numbers improved? I would take it.

CWforFreedom on March 14, 2011 at 11:03 PM

I would take it too. One thing we could count on is that, instead of the way Clinton reacted to being beaten on his budget and Hillarycare (like, at least, some semblance of a man) Obama is bound to behave like the petulant child that he is if his signature legislation goes down onto the fetid manure pile it belongs. The media would, of course, be there to lick his wounds. But, if last November is any indication, the voters are waking up and (the smart ones) are ignoring the media.

kscheuller on March 15, 2011 at 11:17 AM

It matters not what the actual unemployment picture is by Nov 2012, the REPORTED picture will be just as rosy as it needs to be to get obama re-elected.

Just like today, we all know 8.9% is a fantasy created in leftist media minds and shoved down the throats of a public all too willing to accept ANY good news, regardless of what their lying eyes tell them.

But go ahead and think reality will make one bit of difference to a leftist. When obama is re-elected, know it will be a product solely of leftist propaganda that we simply are not capable of defeating. Too few people want to believe leftists are what they are.

runawayyyy on March 15, 2011 at 1:11 PM

runawayyyy, trust me, I know that the media is and will be carrying his water. They were also doing that leading up to last November and it didn’t help the hemorrhaging that the Dems took in the House.

As stated elsewhere on HA, Unemployment isn’t the only thing Obama’s screwing up. I agree, there are far too many leftists who’ll vote for Obama even if he eats a kid, but I do believe that many of the independents and “Obamacans” (so-called republicans who voted for Obama in 2008) who voted for him the last time are VERY SORRY.

kscheuller on March 15, 2011 at 1:59 PM

kscheuller on March 15, 2011 at 1:59 PM

Bless you, you have a great deal more faith in your fellow voting Americans than I do. 2008 about killed that for me. All I can see is a temporary blip, and only in one house of the congress, and they’re not getting the most important job done either (hellooooo, budget?).

And for the record, I really hope I’m wrong about this.

runawayyyy on March 15, 2011 at 2:55 PM

The same economists for whom each week’s jobless claims numbers are “unexpected”?

And this is assuming not even one of the bombs headed towards the economy hits: municipal bond market collapse, losing our bond rating for treasuries, the dollar losing its world reserve currency status, etc. Any ONE of these and even the BoL won’t be able to fudge number enough to keep U3 unemployment under 15%, not believably at least.

PastorJon on March 15, 2011 at 3:03 PM

Any ONE of these and even the BoL won’t be able to fudge number enough to keep U3 unemployment under 15%, not believably at least.

PastorJon on March 15, 2011 at 3:03 PM

Who says it has to be believable? It hasn’t been so far, and his polling numbers are still stratospheric compared to what they should be. The media will tell you what they want you to know, and if you choose to ignore them you will be marginalized or destroyed (or both). How do you think you’re gonna fight that?

runawayyyy on March 15, 2011 at 4:24 PM

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