longwalkdownlyndale asks:
How important is today's jobs report (unemployment fell to 7.8%!) compared to the coverage of the debate? And do you know if this changes the "fundamentals" models in any significant way at all? Or are those sorta set predicting a close election with Obama as a slight favorite? Superficially it seems to me that it will squash the "Romney Won" debate meme and makes his over/under talking point about 8% unemployment look pretty foolish.Hey, I can outsource this one to John Sides, who has an excellent item up already:
The shortest answer is: probably not much. In my earlier post on late changes in the economy, I noted this line from Robert Erikson’s and Christopher Wlezien’s analysis of nearly 60 years of economic and elections data:The only caution I'd put on that last point is that press coverage isn't entirely predictable; it's certainly possible that the jobs report could be a blip in the economic reporting but go away by tomorrow while the debate stays in the news for a while, undisturbed.
…one can predict that actual vote from the current income growth about as well in April as in November. By April, the economic cake is largely baked.
Which is to say, late changes in the economy aren’t that consequential.
If this jobs report matters in any way, it is by shifting the news coverage of the campaign from “Obama bombed in the debate” to “Hey, unemployment fell!” This report is enough of a departure from previous reports to generate some positive news coverage. And this will help to displace the positive news coverage Romney was receiving as a consequence of his debate performance. Given that it’s this news coverage that would boost Romney in the polls, news coverage of the job report could—conceivably, possibly, maybe—limit the boost.
Generally, I've been saying the same thing for the last few months. The general condition of the economy is a slow, unimpressive recovery, but still a recovery. That probably points to a close race, with Obama having a slight edge. Back in the winter or spring, a good or bad jobs report could hint to that changing, but by now any indications about the future are basically irrelevant to this election, which means that as long as the report is within the general range that we're seeing (anywhere from 0 to 200K) it's likely to have very small effects, mainly (as John said) centered around short-term press coverage. The only change is that short-term press coverage in October is presumably more important than short-term press coverage was in July or August.
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I find it baffling that political scientists can take a study that includes 60 years of data (with only 15 data points, mind you) and think that it can have reliable predictive value for an election occurring in 2012.
ReplyDeleteThere was no TV in 1952. No cable networks in 1972. No internet in 1984. No blogs in 1996. No Twitter in 2004. It's a different world now.
It used to be that people could only gauge the nation's economic health by gauging their own household's economic health. Today, economic news spreads like wildfire. There is no need to wait until you hear back from that job interviewer - if you read on Facebook that employment is surging, that will in and of itself have a major effect on optimism, and, in turn, confidence in incumbent office holders.
I'm not saying 7.8% unemployment is so impressive that it guarantees anything. What I'm saying is, it's absurd to assume that economic developments close to the election will have little or no effect on the election's outcome, merely because that was the case for much of the 20th century. It's a different world.
"There was no TV in 1952. No cable networks in 1972. No internet in 1984. No blogs in 1996. No Twitter in 2004. It's a different world now."
DeleteDo you see the failure of logic in this paragraph?
If conservatives continue to push the notion that the numbers are cooked, the numbers will stay in the news.
ReplyDeleteHaha, I saw that Sides post after I posted my question, Doh!
ReplyDeleteIf you guys are interested Nate Silver has a big new post about the jobs report with the quote: " Especially with the Friday jobs report, the economic numbers now seem just strong enough to make the incumbent a favorite for re-election, based on the way the public has evaluated their presidents historically."
Similar to Andrew's question, I wonder if the importance of the jobs report is the spin or the underlying reality. The spin of this report is silver and gold for the Democrats; the unemployment rate fell by 30 basis points (or 0.3%), below the magical 8% threshold
ReplyDeleteThe underlying is much darker. That 0.3% decline in the unemployment rate was accompanied by "only" 114,000 new jobs - if we assume a workforce of roughly 200 million Americans, when the workforce remains constant, a 0.3% decline in unemployment requires 600,000 new jobs. Because the work-age population grows each month, the number who left the workforce in September must be a fair bit higher even then the 486,000 net of 600K - 114K.
486,000+ fewer gainfully employed consumers at a time when workforce participation is at historic lows is an unmitigated disaster. But it won't be spun that way, so I suspect no one will notice. Though like Andrew I am curious whether the spin or the underlying is more important on these things.
Well yeah 114k new jobs, plus 86k new past jobs due to revisions plus "rebaselining" from September that showed around 400k more jobs. 114,000 + 86,000 + 400,000 = around 600,000. But I would also add that the unemployment rate numbers and the monthly job numbers are gathered in totally different ways so trying to compare them and come up with a way for the numbers to "work" is kinda silly. It's apples and oranges. But you are right, as Silver says in that article Obama didn't "win" the election today anymore than he "lost" it on Wednesday. But he is in a favorable position, quite similar to Bush (which JB has pointed out when looking at approval numbers.)
DeleteThe BLS uses two different surveys: household survey and establishment survey. They use the household survey to establish the unemployment rate (I'm pretty sure). Money paragraphs from the BLS:
DeleteThe unemployment rate declined by 0.3 percentage point to 7.8 percent in September.
For the first 8 months of the year, the rate held within a narrow range of 8.1
and 8.3 percent. The number of unemployed persons, at 12.1 million, decreased by
456,000 in September. (See table A-1.)
...
Total employment rose by 873,000 in September, following 3 months of little
change. The employment-population ratio increased by 0.4 percentage point to
58.7 percent, after edging down in the prior 2 months. The overall trend in
the employment-population ratio for this year has been flat. The civilian labor
force rose by 418,000 to 155.1 million in September, while the labor force
participation rate was little changed at 63.6 percent. (See table A-1.)
Whole thing at:
http://bls.gov/news.release/empsit.nr0.htm
And I'm pretty sure the "re-baselining" doesn't get added in until next year. So, Romney could get elected and then have those extra 400,000 jobs added in, the unemployment drops by .5 points and...instant Romney boom! Not 100% sure about this though, someone correct me if I'm wrong.
DeleteThanks for the comments, and thanks for the link Mr. X, I agree with longwalk that these reconciliations are challenging...one of the noteworthy aspects of the bls report is the alarming increase in the "involuntarily part-time employed", which jumped from 8.0 M in August to 8.6 M in September.
DeleteThose ~600,000 more involuntarily part-time employed fairly count toward the 873,000 rise in employment that Mr. X cites. As such its certainly a spinnable win; around kitchen tables in average America, I doubt anyone will celebrate its impacts on the economy.
Not to be dismissive of my fellow Americans, but it's really difficult to wrap your head around big sounding numbers. 200,000? 114,000? 30,000? They all sound like a lot. The country is unfathomably large, but that's often forgotten. When a person hears that 114,000 people were hired last month they are less likely to think that it's an insignificant percentage of the US population and more likely to think that 114,000 is larger than the entire population of their town.
DeleteSee also: Millions, billions, and trillions.