Oct. 31, 2012 at 10:35 AM ET
A possible storm-related delay averted, voters will be getting their last glimpse of the crucial monthly jobs data from the federal government on Friday, three days before heading to the polls to choose who will occupy the White House for the next four years.
With the health of the U.S. economy a critical campaign issue, the numbers could sway undecided voters about who has a better plan to get millions of jobless American back to work -- President Barack Obama or former Mass. Gov. Mitt Romney.
The so-called headline jobless rate, cited most frequently despite its limitations, is expected to edge up to 7.9 percent in October, after it dropped to 7.8 percent in September from 8.1 percent in August. Some economists believe an October uptick may result from changes in the size of the official count of the work force, which tends to add short-term wrinkles to longer-term trends.
The more crucial (at least to economists) non-farm payrolls are forecast to have risen 124,000, barely more than September's 114,000 gain, according to economists polled by Reuters.
“The U.S. economy remains locked on an anemic growth path into the elections and fiscal cliff,” said Benjamin Engen, a market economist for Action Economics.
That could add fuel to Romney's assertions that Obama’s policies have held back hiring during one of the slowest economic recoveries in a half century. Obama has countered that five million jobs have been created since a December 2009 trough, and that some 800,000 more Americans are working today than when he took office.
The data coming Friday are based on a survey take before Superstorm Sandy devastated the economies of 12 states, including the New York region, that account for roughly one quarter of the U.S. economy. Widespread power outages and transportation shutdowns interrupted thousands of business. The Labor Department confirmed Wednesday that the data would be released Friday, even though the federal government had been mostly shut down by the storm for two days.
Prior to the storm, the U.S. economy was on a slow but steady path of growth, with gross domestic product expanding at a 2.0 percent annual pace in the three months through September. Consumer spending and confidence have also been gradually improving.
But the pace of growth hasn’t been strong enough to spark enough hiring to bring the jobless rate down to levels normally seen four years after the end of a recession.
"For this reason the labor market is currently neither weak enough to do serious damage to Obama's re-election chances nor strong enough to give him a boost," said Bernd Weidensteiner, an economist with Commerzbank in Frankfurt.
The sluggish pace of hiring has also been blamed on increasing uncertainty by business managers about the state of the economy next year if the next Congress and White House proceed with a large package of tax increases and spending cuts. The so-called “fiscal cliff” was intended to force Congress to commit to reining in budget deficits. But most economists warn that, unless modified or postponed, the measure will almost certainly tip the economy back into recession next year.
To try to gauge the impact of the election on that policy debate, IHS Global Insight economists Nigel Gault and Gregory Duco recently analyzed the economic plans announced by the two candidates. (They cautioned that, unless the election produces a Congressional majority for the same party that takes the White House, there’s little assurance that either candidate’s plans will be enacted.)
Both plans would act as a drag on the economy, the economists found. Under Obama’s plan, some $125 billion in payroll tax savings would be eliminated, and taxes raised on higher income earners, reducing the money available for consumer spending.
But broader tax reform, along the general outlines proposed by Romney, “should not be expected to 'kick-start' demand in the short term. It would not offset a sharp, immediate tightening of fiscal policy,” they said.
While Romney’s plan would not increase income taxes, it calls for deeper cuts in spending, including paring back extended unemployment insurance benefits, with a target of shrinking the federal budget to 20 percent of GDP by 2016.
That means the drag on the economy “is longer-lasting in the Romney simulation because of the cuts in government spending required to reduce government spending to his target,” the economists said.
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