Nov. 2, 2012 at 11:27 AM ET
If some voters haven't decided who to choose as the leader of the free world next Tuesday, the latest jobs data isn't likely to help them much.
Friday's employment report showed another month of steady but slow improvement in the job market: not too hot, not too cold, but not right enough to put a big dent in unemployment. More crucial to many voters likely will be how the federal government responds to the disaster caused by Superstorm Sandy.
Payrolls expanded by 171,000 jobs last month, the Labor Department said, more than the 125,000 forecast by economists. The government also said 84,000 more jobs were created in August and September than initially estimated.
But the unemployment rate rose to 7.9 percent from 7.8 percent in September, largely because more workers who had given up looking for a job decided to resume their searches. The Labor Department only counts people who are looking for work as unemployed.
The jobs report is President Barack Obama's last report card for his efforts to get the economy moving again and create jobs for millions of Americans still sidelined by the worst recession in a half century. The feeble recovery – both its causes and the candidates’ proposals to accelerate it – have dominated the campaign.
But because the numbers are roughly consistent with other recent reports, the news isn't expected to sway many voters.
“We doubt that October's employment report is either strong enough or weak enough to have any marked impact on next week's presidential election,” said economist Paul Ashworth of Capital Economics.
The report contained information that both campaigns can use. Upward revisions to earlier reports show that the economy has created an average of 173,000 jobs a month since July. That's up sharply from from a pace of 67,000 a month from April through June. That acceleration tends to support Obama’s contention that the economy is on the mend.
“We see a picture of an economy that’s healing,” said White House chief economist Alan Krueger, shortly after the numbers were released. “So we’re moving in the right direction, and what we need to do is build on this progress."
The uptick in the jobless rate, which most voters consider a proxy for the job market outlook, could help bolster Romney’s argument that the White House hasn't done enough to boost job growth.
"Today's increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill," Romney said in a statement on the jobs data.
Also, with so many people looking for work, employers have been able to hold back raises. The latest numbers show that workers' paychecks continue to fall behind the inflation rate.
Over the past 12 months, hourly earnings for all workers are up just 1.6 percent, the lowest on records dating to early 2007. A measure with a longer track record that covers only production and non-supervisory employees was up only 1.1 percent -- the lowest on records dating to 1964
Balanced against that are other data, which have shown the economy picking up strength in the second half of the year. Consumers are spending more on big-ticket items, like cars and appliances, for example.
"House prices are rising and consumer confidence has finally picked itself off the floor. Both the retail and construction sectors piled on jobs in October, hinting at a return of business optimism," said Marcus Ballus, trading director at MB Capital in London. "But there is continued weakness in America's manufacturing sector, and there is still no sense of inevitability about the recovery."
Obama will wind up his campaign with the highest unemployment rate of any incumbent since Franklin Roosevelt – a rate that is also slightly higher than when he took office.
“The jobless rate is higher than it was when President Obama took office, and there are still 23 million Americans struggling for work," Romney said.
That number – the broadest measure of unemployment that the Labor Department calls “U6” – includes people out of work, those who’ve given up looking and part-time workers who want a full-time job but can’t find one. That wider jobless rate has also shown improvement, falling from 16.0 percent a year ago to 14.6 percent last month.
Even as the pace of job growth picked up in the second half of the year, the outlook for the economy has become cloudier. Much of the uncertainty comes from the looming package of tax hikes and spending cuts that take effect at the start of next year
Unless revised or postponed, the tax hikes and spending cuts will almost certainly push the economy back into recession, most economists say. As a result, companies are reluctant to hire many new workers until it becomes clear how that budget impasse will be resolved.
Neither candidate has proposed a specific plan to break the political stalemate over the “fiscal cliff” in the next two months.
Longer term, both have pledged to cut swollen federal deficits. Those pledges are popular with U.S. voters, but both candidates’ budget proposals could weaken the economy. As debt-laden European countries have demonstrated, cutting spending and raising taxes too quickly creates a major drag on growth.
Obama has said that wealthier taxpayers need to pay “their fair share,” an increase that would reduce the amount of money available for spending and investment. If re-elected, the president also is widely expected to allow a two-year-old payroll tax cut to expire. That would raise taxes on all wage earners, further cutting into spending.
Romney has proposed cutting federal government spending sharply to a target of 20 percent of gross domestic product by 2016. That pace of budget-cutting would also produce a drag on growth, economists say.
With millions of households and businesses without power after a monster storm slammed into the East Coast Monday, Friday’s jobs report is also expected to be overshadowed by the ongoing fallout from Superstorm Sandy. For better or worse, the Obama administration’s response to the disaster will likely have a greater impact on the few remaining undecided voters who haven’t made up their minds.
“The three people that are still undecided in the United States about this election were not waiting for the jobs number,” said James Nussle, a former budget official in the George W. Bush administration.
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