June Gloom In July?
A MarketWatch survey of economists expects the U.S. to add about 100,000 jobs in May, keeping the unemployment rate at 8.2 percent. In addition to weak job numbers, the Institute for Supply Management released a report Monday that "economic activity in the manufacturing sector contracted in June for the first time since 2009." It should be noted, however, that the report also found the overall economy grew for the 37th consecutive month.
Both the numbers raise concerns about the economic recovery, intensifying the discussion around a primary issue, if not the core issue, in the presidential campaign.
But it may be too soon to make definitive predictions based on these results. Given the instability of Europe's economic circumstances, it's likely that events overseas will have more influence on the electoral outcome than the interpretation of these monthly tea leaves.
For a while, the number 7.2 has been tossed around. No president since Franklin Delano Roosevelt has won re-election with the unemployment rate above that number, which now seems unattainable for President Obama.
Still, looking at this small sample size in presidential politics is not very telling, something The New York Times' Nate Silver illustrated in a June 2011 blog post. The post's last paragraph sums it up well:
Clearly, Mr. Obama’s odds will be impaired if his hand contains more deuces and treys than aces and kings — and that, in essence, is what weaker data from the labor sector implies for him," Silver wrote. "But this is an inexact science — more so than either journalists or political scientists tend to acknowledge.
Another question to consider in interpreting June's predictors is how important the economy is for voters. With unemployment expected to remain at 8.2 percent and economic confidence letting up in June, it's hard to imagine voters not prioritizing the economy at the ballot box.
It's important to remember, however, other issues that matter to voters. A Gallup poll based on Daily Gallup tracking interviews from April 16 to May 31 found that 21 percent of registered Hispanic voters said health care was the most important issue to them, followed closely by unemployment at 19 percent and immigration policies at 12 percent. The fact that health care had the most support is significant, particularly since the average unemployment rate for Hispanics has stayed higher than the national average, according to a new tool that desegregates unemployment data.
What's more, when Gallup asked U.S. registered voters the same question, health care was tied with economic growth at 20 percent. In fairness, other polls found that voters believe the economy is most important. Still, health care comes in a close second.
This is not to say that the economic outlook is irrelevant. It's not. Polls can often belie the underlying emotions attached to a particular issue. Yes, for many voters health care and economic growth could be of equal importance. However, voters might feel more intense about health care or the economy even if they objectively rate the importance of both equally.
Another recent statistic makes it difficult to accurately predict how the economy will affect the election. According to a CNN poll released today, 60 percent of Americans believe the economy will be in "good shape" by next year, up from 39 percent in October.
In short, there is no doubt Friday's jobs report will have important economic and political consequences but there's still a long time until November.