Image: Barack Obama
Pablo Martinez Monsivais  /  AP
President Barack Obama walks across the South Lawn of the White House following his arrival on Marine One helicopter, Wednesday, Aug., 17, 2011, in Washington.
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updated 9/2/2011 12:52:48 PM ET 2011-09-02T16:52:48
analysis

The political significance of unemployment rates in the 9 percent range just 15 months before a presidential election is pretty obvious; indeed, no post-World War II president has faced this bleak a jobs picture at this juncture.

Other measures marking the breadth and depth of the jobs problem also merit close attention, however. The alternative “U-6” unemployment rate includes people working part-time but seeking full-time work and those who have given up seeking employment. This U-6 rate has been running between 15.7 percent and 16.2 percent since March; it was 16.1 percent in July. To measure the depth of the jobless problem, look at the number of people unemployed for 27 weeks or longer; in July it was 6.2 million, and 44.4 percent of those folks have been out of a job for six months or longer.

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Although the unemployment numbers are closely watched and widely recognized, the two sets of data that have the best predictive value for elections both came out in late August. The quarterly gross domestic product numbers showed that the economy grew at a rate of just 1.0 percent for the second quarter; in addition, the first-quarter rate was revised down to just 0.4 percent. Keeping in mind that the traditional definition of a recession is two consecutive quarters of negative GDP growth, the average of 0.7 percent growth for the first two quarters of this year means that we are a mere eight-tenths of a point above the recession level for the first half of this year. (Economists have a more technical definition and a special committee that determines when recessions actually begin and end.)

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The well-regarded Wall Street research firm ISI Group pointed out in late August, “Since 1970, in six of the seven times real GDP [year over year] has slipped below +2.0 percent, a recession has been signaled,” a situation known as stall speed. Whether we technically end up in a recession is a distinction without much of a difference for a president seeking reelection. The Blue Chip Economic Indicators survey of top economists in early August showed projections of economic growth of just 1.8 percent for calendar year 2011 and 2.5 percent for 2012. GDP growth is expected to rise to only 2.8 percent for the third quarter of 2012 and 2.9 percent for the fourth quarter; the report projected unemployment just barely dipping to 8.7 percent in the third quarter of next year and to 8.5 percent in the fourth quarter. Given the slow GDP growth, even that modest improvement in the jobless rate may be overly optimistic unless even more people stopped looking for work.

A more esoteric economic measure, but one that many political scientists and economists have found to be the most reliable economic statistic for predicting elections, is real personal disposable income — specifically, changes in that number from the same month the previous year.

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On Aug. 29, the Commerce Department reported that personal incomes, after inflation and personal-income taxes, increased by just 1.2 percent in July from last year, marking a pretty steady erosion since October, when real PDI grew at 3.8 percent from the year before. That postrecession peak was followed by 3.6 percent growth in November, 3.2 percent in December, 2.8 percent in January, 2.7 percent in February, 2.4 percent in March, 1.8 percent April, 1.3 percent in May, and 1.4 percent in June, before July’s 1.2 percent. Plotted on a graph, since October the real PDI change from a year earlier looks steeper than any black-diamond ski slope. (For real junkies, the Federal Reserve Bank of St. Louis offers the FRED Economic Data website, chock-full of numbers and a program to plot your own graphs.)

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The economic data buttress the view that this presidential election is the GOP’s to lose, although if Republicans nominate a candidate who has difficulty connecting with the independent voters between the two ideological and partisan 40-yard lines — that is, the voters who ultimately decide elections — they may well test that proposition.

This economic downturn obviously began before President Obama took office, and its severity is rooted in the financial crisis of 2008 and in Bush administration policies. But over four years, presidents come to own the economy and, fairly or not, are expected to take responsibility for it.

The challenge that the Obama reelection campaign faces is to figure out how to either shift that responsibility to the GOP or make the case that the alternative might be even worse. It’s obviously not the situation that any political contender wants to be in, yet that is where Obama is.

The article, "Obama’s Anchor," first appeared in the National Journal.

Copyright 2012 by National Journal Group Inc.

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    >>> ronald reagan and margaret thatcher restored the economic and military greatness in their time period . we are in a similar period. they are both tremendous examples.

    >> wow.

    >> she wants margaret thatcher and ronald reagan in this race. a lot of conservatives would agree.

    >> well, they call themselves conservatives.

    >> lesley stahl new ronald reagan . he was a friend of lesley stahl 's and michele bachmann is no ronald reagan .

    >> i'm not sure if you look at the first campaign he ran.

    >> in '76?

    >> yeah. this group would have said almost exactly what we say about michele bachman . he can't get elected. he's too radical. he's an actor. he's been governor of california. he doesn't have enough experience. i don't think anybody thought ronald reagan was going to get elected.

    >> that's true.

    >> mort?

    >> i happened to work in the white house when he was president.

    >> you did?

    >> yeah. when nick got jumped by the kgb.

    >> yeah?

    >> i tell you, we met every day. he got the issue right away. he was a very decisive. i was astonished by it. i was surprised.

    >> it's like the "saturday night live" skit. they go behind the scenes and he was in charge of them.

    >> he was absolutely in charge. it was a complete surprise to me.

    >> i was not working in that white house at that time. what was striking about seeing michele bachmann s when is the last time we heard from michele bachmann , she wins in iowa then rick perry comes out. you have not seen her on television.

    >> you see peter alexander more.

    >> i want to follow up on what lesley had to say. i remember reading the story and siting it many times. after 1976 , nancy reagan knew ronald reagan was going to run again. she asked a friend to give a dinner party . ten people that would like to sit down and talk and plan for the next four years. movers and shakers. mike wallace called her back said sorry, i couldn't get ten people together. she said i'll take anybody. sorry, nobody wants to have dinner with ronald reagan .

    >> come on, he was president at the time?

    >> no, this was '76. the person writing the story was making your point exactly. ronald reagan was considered such a joke that mike wallace couldn't bring a few people together for a little dinner party for ronald reagan . a man who would be president four years later. staggering.

    >> staggering. when you jump forward when he had his recession. look, i'm only talking about performance here. i'm not talking about coming up with good issues or anything like that. just in terms of the performance, he changed our perception of ourselves just by humor. actually, his adorableness. he used to go out and tell jokes. the jokes were cutting. they were funny at the same time. he never got the aura of being a mean old guy. he turned our spirit around. he had -- his ratings were lower in his recession than president obama 's have ever been, even now. he got down to the middle 30s. in this period, he just slowly, like an aircraft carrier, slowly turned.

    >> let's talk about this. you were there in '82 and '83, inside the white house . you are right. his ratings were lower. unemployment was higher and yet there didn't seem to be this sense of hopelessness.

    >> oh, yes. we had food lines.

    >> no, no, i mean inside the white house . remember carter in '79? i would say barack obama in 2011 , you thought there may be a second act with ronald reagan . they were figuring out what to do and this guy would get through it. but you didn't sense that in '79. tell me how it's different today than it was in '82 and '83 when things were so much worse in unemployment.

    >> it's almost, in my memory, believe it or not, was worse then because even in the white house , he had, as i said, food lines. nancy reagan was the butt of not just ridicule, but venom. she was getting fine china and people were suffering in visible ways. we have pictures of people in food lines and people were suffering. it seemed that the animosity was more active and uglier and uglier.

    >> you remember things tougher for reagan in '83 than for barack obama in 2011 .

    >> i think it was worse. he turned it around personally.

    >> one thing involved that was not involved now, it was provoked by the federal reserve raising interest rates to 20% to break inflation. that's what they were able to do. reagan backed him. it was unusual for a president. once we broke the inflation that was hurting lot of people, they got a lot of credit for it and the economy took off. there was a policy reason behind what they were doing. that is what is forgotten. that's what produced high unemployment. there was a rational like we don't have today.

    >> it created more anger to the president. they could blame him. now you get more of the sense that so many different reasons causing this.

    >> right.

    >> you don't blame obama . he isn't the target in the same kind of anger that we felt to reagan . go back to the point about how this president, how many -- if you got a room full of random 100 people from all political sides and said how many people think the speech he's going to give is going to ignite our passion and make us enthusiastic. if he's going to give us an idea that we can understand and come behind and no one will raise their hand. no one thinks it's going to happen. then what? he goes out to sell what?

    >> sam stein, what is the answer to that?

    >> i think, you know, the idea that obama represented it was the idea you can get beyond partisanship. it was a very 2008 idea. part of the problem the white house faces is we have been through two and a half years where he can't even agree on a date for a speech on jobs. it's damaging to the president. this post partisan glow everyone was expecting has fallen apart.

    >> what we look at now is something this president has not dealt with. he hasn't dealt with low expectation. he came in with ridiculously high expectations. now, people are like you said, the 100 people in the room, they are not expecting much.

    >> do you think he'll surprise us?

    >> absolutely not.

    >> i hope he does.

    >> you know what is so shocking, you follow a lot of these presidential speeches, a lot of big events. there was a time when reagan went out. if he delivered a speech to the nation you wondered what he was going to say. bill clinton , you never knew what he was going to say. this president, when he does an address, democrats as well as republicans say the same thing, what was that about? why did he do it?

    >> exactly. will this be different? you wonder if he can, you know, one of the things that reagan did and clinton as well, they understood you have to have that one similplistic thing.

    >> we don't do theatrics.

    >> come on. reagan said if you are not a good actor, don't get in this game. he was right.

    >> sam , i'm sure you have heard the white house loves to brag. they don't do theatrics, they don't boil it down.

    >> the american people are smarter.

    >> i don't care if you are ronald reagan , fdr, steve jobs or the beatles. one idea, he pursued it with a passion. this white house had hope and change. what does it mean?

    >> that's the problem, i think. they are not -- they have been sticking to the same script and what the current situation calls for is a different script. i was in a briefing a long time ago with the prominent democratic pollster. he said the biggest challenge a president faces is convincing an american public that's depressed that things are going to get better or they are getting better. they don't feel it. they don't understand it or want to hear it. i think bill clinton did a good job with it. ronald reagan did a good job with it. he needs to convince the american people the next few years are going to be better.

    >> can i ask you a question? say he comes out with a program that will have been inspired, i think by ceos and business people . he's reaching out for their ideas. what will the business community do to a plan that calls for the infrastructure bank? a lot of the things we expect? will they get behind them on this?

    >> let's assume there's a decent program. there's enormous anxiety or nervousness about the president in the business community . you can't just change the sense that you are been attacking the business world, which has been the case in the business world for the last three years and say well, in one speech, it's going to change. that confidence level is extremely important. reagan never lost it and obama never had it.

    >> bill clinton , peter alexander , bill clinton was the dream candidate for wall street . he sees most republicans too extreme on social issues. bill clinton could always keep that balance. we talked yesterday with what it was between the republican congress and president obama , the time and place of the speech, there's no fear to stand-up to the president. president reagan changed the way we thought of ourselves. i think, if you cut back to 2008 , everybody in this country anticipated, not everybody, but a large population across the board that president obama would have that same success in changing how we think of ourselves.

    >> he said that.

    >> because it's failed to happen, i think it's created a deeper cabin to crawl out to, you know, the higher standard for the next candidate.

    >> that's one of the thing that is concerned me. i have a lot of problems with the president's domestic programs, from the beginning because of a small democrat. there were so many people that were excited about this president, about this man, about the belief that washington could change. one of my conservatives -- i'll so co- conservative friends i don't have many conservative friends anymore. they get upset with me because i talked about how inspired i was on the day of the president's inauguration. even if i didn't love his policy. 2 million people waving flags . this event every bit as historic as martin luther king 's march on washington . i kept saying boy i hope this bubble doesn't burst.

    >> how much do you think --

    >> for the same of america. not for the sake of this president or his policies.

    >> how much do you think the bubble burst because he didn't, he didn't reach the expectation or that the republican party decided first and foremost objective was to burst the bubble?

    >> the president --

    >> what do you think?

    >> one of the things reagan did that was remarkable, he established great relationships with the leaders of congress. tip o'neill and he worked on social security . they transformed social security . everybody thought it was a deadly issue. that does not exist at all. this administration has no good relations with the republican party in congress.

    >> boehner and the group in the house pulled the rug out.

    >> hold on quickly though. it's important for people to realize and you guys realize it that this isn't just -- this isn't just a partisan issue. ronald reagan had great relations with tip o'neill. jimmy carter didn't.

    >> true, i know.

    >> they hated each other from day one. that's in part why jimmy carter had the problems he did over four years. sam stein, a lot of people are pointing fingers saying that's been the president's biggest problem. i hate to be a pest about this. barack obama , on washington, d.c., for the most important years of his presidency, for two years a filibuster proof majority in the senate, 79% majority in the house of representatives . even in january or february or 2009 , columnists were blaming republicans for him not getting things done. sorry. the republicans would have had the same impact in france if they all went to france.

    >> hold on. hold on. two things. one is --

    >> wait, wait. barack obama had a filibuster proof majority at times. they couldn't have stopped him.

    >> one is columnists are stupid. if you look at the year he had all those assets, he did get stuff done, the stimulus, wall street reform, don't ask don't tell. all these things happened that people seem to forget. they were fruitful years.

    >> i'll let you finish, but they did forget. i's what we were saying in 2009 . people walk into a store, i want shoes. job. the store person says let me show you some ties. no, i want shoes. i'll show you shoes in a second, but these sports coats are awesome. finally, you walk out of the store, if you're not going to give me my shoes, i'm going. he had a chance to work on jobs x 2009 and 2010 .

    >> that's a different argument. they passed the stimulus package . they thought it was going to do more than it did. they turned their attention to health care . listen. talking about ronald reagan 's relationship with tip o'neill. as far as i can recall, he never said his objective was to make sure ronald reagan never finished basketball. it's ironic that his short time in the senate probably hurt that. we have better relations. keep in mind, this is a two-way street. if your primary add va sar wants out, you are not going to have good relations.

    >> if somebody says something like that about you, you go there. you just go there. if someone makes me uncomfortable, i go there. what is this, not calling people out.

    >> "the new york times" did a front page story showing obama did not meet with mitch o'connell for the first 18 months of his presidency.

    >> i'd call him in and call him out.

    >> you can't work with people if you don't establish those relationships.

    >> some republicans acted shamefully toward this president calling him awful names. at the same time, ronald reagan , fdr, lbj, they use those attacks. ronald reagan , if somebody called him a nasty name, he's --

    >> nobody called him one. they were afraid to.

    >> back to lesley. your parallel between bachmann and reagan . what are we to draw down from that? this is how the conversation started.

    >> that, you know, i was having this conversation with john harris in the green room . i think we make a mistake in thinking that the perry's or the b bachmann's can't make it. this is very possible.

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