Last week’s job report was better than expected, but it wasn’t good. With growth over the last year just 1.6% and unemployment still over 9%, it’s increasingly clear that the economy won’t have recovered much by the next election. Many argue that Obama should “pivot to jobs” now that the debt ceiling issue is behind him, but it’s unlikely that he can negotiate anywhere close to enough stimulus to meaningfully improve the economy. That means that Obama will have to run for reelection with the economy still in terrible shape.
In an op-ed for The Washington Post, Lawrence Summers, former Director of Obama’s National Economic Council, wrote that “On the current policy path, it would be surprising if growth were rapid enough to reduce unemployment even to 8.5 percent by the end of 2012.” As Chris Cilllzza and Aaron Blake point out, no president in the modern era has won reelection with unemployment over 7.5% (Reagan won with unemployment that high in 1984). At the current rate of employment growth, the unemployment rate will still be well above that at the time of the next election.
Going back further, FDR was able to win reelection in 1936 with the unemployment rate at nearly 17%. So it can be done, if voters can be convinced the economy improving. In fact, as Ezra Klein wrote before the midterms last year, the evidence suggests that real disposable income is a better predictor of an incumbent’s chances of winning reelection than the unemployment rate. No president has been able to win reelection in the modern era with less than about a 1.2% growth in real disposable income over the prior year. According to the latest Bureau of Labor Statistic report, real disposable income grew at around 1.1% over the last year, which suggests that the election were held today, Obama would probably lose.
Even if growth accelerates, Obama will have to convince voters that Republicans are more to blame for our economic problems than he is. Now that the debt ceiling issue is resolved, Democrats have already begun to try to spin the faltering economy. Last week, the Democratic National Committee distributed a memo making the case—which is the case they have to make—that “The field of Republican candidates simply offer the same failed Republican economic policies of the last decade that nearly drove our country into a second Great Depression.”
Photo credit: Pete Souza