What the plunging unemployment rate really means for SCOAMF’s reelection

Posted by on Jan 06, 2012 at 11:09 am

Will the Obama reelection campaign take the bait and start running hard on the president’s economic record?

New job numbers out today from the Labor Department show the unemployment dropped to a near three-year low of 8.5 percent in December. What’s more, nonfarm payrolls increased by 200,000 last month, way above economists’ expectations for a 150,000 gain. Those two employment statistics, when added to a likely fourth-quarter GDP number of 3-3.5 percent  (which would be the best showing since the second-quarter of 2010) — sure make it tempting for the White House to engage in at least a smidgen of economic triumphalism. Something like: “It’s been a long road and we have a lot further to go, but our plan is working. Four more years.”

Not “Morning in America” exactly, but maybe “Breaking Dawn in America.”

But such a feel-good campaign strategy would be risky. Those headline economic numbers are terribly misleading, hardly reflecting the devastation most Americans still see every day. An 8.5 percent unemployment rate? Please. If the size of the U.S. labor force was as large as it was when Barack Obama took office, the unemployment rate would be 10.9 percent. But since so many people have gotten discouraged and stopped looking for work– and thus disappeared by government statisticians —  the jobless number has been artificially depressed.  A better gauge of the jobs picture is the broader U-6 rate, which includes part-timers who would rather have full-time jobs. It stands at a whopping 15.2 percent.

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