If President Obama is going to win another term in 2012, the economy will have to improve significantly. Forecasters don't think it will happen.
On Friday at 8:30 a.m., the Bureau of Labor Statistics will release the November unemployment figures. Like many other economic statistics and poll numbers, their impact on 2012 may now seem theoretical or hypothetical. But with the general election less than 12 months away, they are becoming more and more relevant.
Economists expect the November jobless rate to be around the same 9.0 percent rate it was in October, which was down one tick from 9.1 percent in the three previous months. Unemployment had been 8.9 percent in February and 8.8 percent in March. Otherwise, it has been 9.0 percent or higher since May of 2009, topping out at 10.1 percent in October 2009. Not so closely watched but more politically telling will be the U-6 rate. This is a measurement that adds the unemployment rate with the percentage of people working part-time but seeking full-time work, along with those who have given up looking all together. For October, the U-6 rate was 16.2 percent, down three-tenths of a point from 16.5 percent in September.
It's highly unlikely, indeed unrealistic, for Democrats to expect a replay of the 1981-84 Reagan economy, where unemployment peaked at 10.8 percent in November 1982. That coincided with an ugly midterm election. The jobless rate dropped to 8.5 percent by November 1983. It was on its way down to 7.4 percent in October 1984, the month before Reagan's reelection. It reached 7.2 percent in November. The Federal Reserve Board last week released the minutes of its Nov. 1-2 meeting, along with the forecasts for the Fed board members and presidents of the regional Federal Reserve banks. Among all board members and regional presidents, the range of jobless forecasts for the fourth quarter of next year (the time of the election) was 8.1 percent to 8.9 percent. The central tendency, which drops out the forecasts for the three most optimistic and the three most pessimistic, resulted in a range of 8.5 percent to 8.7 percent. If the most optimistic of the Fed officials' forecasts turn out to be prescient, it's easier to see how Obama gets reelected. It will still be a challenge but will be considerably more plausible than if the pessimists turn out to be right and the jobless rate is little better than the current 9.0 percent.