That's the question asked by James Pethokoukis today:
The Hill sets the economic bar awfully low:
Economists who study the labor market said this week that they expect unemployment in 2012 to average 8.5 percent, down more than a point from the 9.6 jobless rate of today. Heidi Shierholz, an economist at the Economic Policy Institute, said every forecast she has studied predicts rapid job growth in 2012, even though the national number will still be a far cry from full employment. "It's still going to be so high in 2012, but people are going to be feeling better," Shierholz said.
Mark Zandi, the White House's favorite economist to quote because of his advisory role with Sen. John McCain's (R-Ariz.) 2008 presidential campaign, sees the same picture. Zandi said Obama's stimulus plan has achieved its goal. The plan, Zandi said, prevented another Great Depression while giving the public sector time to kick in and start hiring, which will be in full effect when Obama is running for reelection.
"The trend is going to be in strong favor of incumbents in 2012," said Shierholz.
I really don't think so, though Ms. Shierholz from the liberal EPI would surely like that to be the case.
Unfortunately for the nation, and maybe for Obama, 8.5% looks all too plausible. Recoveries from financial crises are slow and hard.
So is Pethokoukis right? I'm not quite as pessimistic as he is about Obama's chances, but if unemployment really is at 8.5%, I have to think that he will at the very least face a really tough campaign battle--yea, even if Sarah Palin is his opponent. Unemployment was 7.7% when he took office. I think he's going to have a hard sell if four years later, it's almost a full percentage point higher. If we put the car in D, how come it's not going anywhere, Mr. President?
It will be particularly hard if it's not changing fast. Unemployment was much higher under Reagan, hitting almost 11% at its 1982 peak. But the rise was short and sharp, the decline equally dramatic; by June 1984, unemployment was back down to 7.2%. We've already spent as many months above the 9% unemployment line as Reagan did, and it doesn't look ready to drop below that level in the next few months. Reagan was dealing with a pure monetary recession: Volcker raised interest rates dramatically in order to get inflation under control, and as soon as he loosened his iron fist, the economy bounced back. This recession is vastly more complicated, with fiscal, regulatory, and other problems that still need to be worked out. I would be very surprised if we saw any sort of dramatic bounce in the next eighteen months--and the next eighteen months is what matters, because most political analysts I've talked to think that after about June, an improving economy doesn't help the incumbent. George H.W. Bush had a fabulous third quarter, economically speaking, and still lost to Clinton.
That doesn't mean that Obama can't get re-elected if unemployment is 8.5%. But I don't think any president since Roosevelt ever has--and if unemployment hadn't hit nearly 25% under Hoover, I doubt Roosevelt would have won re-election either. If I were the Obama administration, I'd be praying like hell for something in the low sevens.