Unemployment Politics: How Much Economic Recovery Does Obama Need?

May 4, 2012 5:30pm

President Obama might not be able to claim things “are getting better” on the campaign trail this fall.

After a rocky start to his presidency, in which the unemployment rate topped out at 10 percent nine months after he was inaugurated, the economy has steadily chugged back toward normalcy. The jobless rate has dropped .9 percent in the last year, sitting now at 8.1 percent–which is still worse than it’s been in April of a presidential election year since at least 1948.

Democrats maintain that the unemployment rate won’t determine Obama’s fate in November as much as its trajectory will: If the economy is improving, voters will trust the president’s handling of it.

But how significantly must the economy improve? As voters make up their minds over the summer, how many more months of steady improvement will Obama need?

And, more importantly, what if the economy stagnates?

Historical lessons are clear enough in volatile economic years, but are there a few lessons we can learn from stagnant election-year economies, too.

 

OBAMA’S ECONOMY

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It’s well documented that Obama inherited a bad economy, and for the first year of his presidency, the unemployment rate flirted with double digits.

The rate didn’t shrink noticeably until it dropped from 9.6 percent to 9.4 percent in June of 2010, then again from 9.8 percent to 9.4 percent in December.

That the economy was bad, and that the recovery reversed during the summer of 2010, surely did not help Obama and Democrats during the 2010 midterm elections.

Since the beginning of 2011, things have looked better. After stagnating between 8.9 percent and 9.1 percent from January to October, 2010,  unemployment has steadily dropped to 8.1 percent. The rate is .9 percent lower than it was last April.

 

1984: REAGAN WINS ON STALLED RECOVERY

If the economy stays how it is, the election of 1984 suggests Obama might be okay.

Ronald Reagan won reelection over Walter Mondale under broadly similar circumstances to Obama’s. In April 1984, the economy had recovered aggressively over the previous year, dropping 2.5 percent to 7.7 percent.

Reagan faced a similar problem: the unemployment rage was ugly, but its trajectory was good.

Between May and June, the rate dropped another .5 percent. Over the last six months of the election, it rose briefly, but the rate was the same in November as it had been in June. With 7.2 percent unemployment on Election Day, a recovery that had ceased in May was enough to save Reagan.

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One important difference: Reagan’s recovery was much more significant than Obama’s. The economy had been worse under Reagan, and it had gotten better more dramatically. Reagan’s recovery was far steeper than Obama’s. Between June 1983 and Election Day 1984, the unemployment rate dropped 2.9 percent. To equal that, Obama would need his unemployment rate to shrink by another 1.9 percent between now and November.

 

1992: CLINTON WINS ON WORSENING ECONOMY

George H.W. Bush faced a big problem Obama doesn’t have: An economy that had moved the wrong way.

In April of 1992, Bush had seen unemployment rise by .7 percent over the previous year, close to the opposite of Obama’s .9-percent improvement. Between April and Election Day, the economy stagnated: Unemployment was 7.4 percent in April, and it was 7.4 percent in November.

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But over that span, the economy got worse and then better, peaking at 7.8 percent in June before it dropped .4 percent over the final six months of the race.

 

1976: IS OBAMA THE NEW FORD?

Gerald Ford’s loss in 1976 might offer the best case-test for a stalled Obama recovery.

In April of 1976, Ford had seen the unemployment rate drop 1.1 percent over the previous year, resting at 7.7 percent. It ultimately stagnated over the course of Ford’s election year, dipping to 7.4 percent in May and climbing back up to 7.8 percent in November.

The rate didn’t vary much over the last six months of his reelection, and it remained a net constant.

If the current economy stagnates between now and November, Obama will face essentially the same unemployment picture Ford did–except with a rate that’s higher by a few tenths of a percentage point.

None of these examples match Obama’s political or economic circumstances too precisely, and the unemployment rate isn’t everything.

But if we ignore Obama’s slightly higher unemployment rate–and that’s a big thing to ignore–past examples tell us he’ll need to demonstrate some additional recovery in the near term. He’s in better shape than Bush in ’92; after some steady improvement over the last year, he can afford to coast on a flat jobless rate for the final months of his campaign like Reagan in ’84; but what Obama can’t afford is for things to get worse in the near term, even if the rest of the summer is kind to the ranks of America’s jobless.

Images from BLS using Government Data

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