Voters: It’s the jobs, stupid
Employment seen as potent election predictor
The government’s employment reports coming Friday and next month could have an outsized impact on this fall’s elections, as voters firm up their opinions of the economy during the summer, say economists on both sides of the political spectrum.
So far, the economy has been strong enough to help President Obama’s re-election prospects, if barely.
According to a widely followed forecasting model by Yale economist Ray Fair, who uses economic variables to predict political outcomes, Obama’s projected to win with 50.2% of the two-party popular vote. In state-by-state modeling by Moody’s Analytics, the president is on track for 303 electoral votes — more than the 270 he needs.
In Washington, economists who work closely with politicians believe job-growth numbers drive elections, absent a foreign-policy crisis. More formal forecasting models track economic growth through September of election years, changes in unemployment rates, and changes in income, Fair said.
Economists surveyed by Bloomberg News say the economy is expected to have added 150,000 jobs in May, with unemployment holding at 8.1%. That’s up from 115,000 new jobs last month, but below the 200,000-plus monthly gains this winter.
“It’s very close,” said Fair, who pointed out that his model says Romney will win if growth slows this year, as many economists expect. “The model has an average error of 2%.”
A look at old data supports the theory that midyear job growth is a solid election predictor. Employment grew strongly in the spring and summer of 1972, 1984, 1996 and to a lesser degree 2004 — and presidents won re-election. The opposite was true in 1976, 1980 and 1992, when incumbents lost.
Fair says the change in growth and employment matters more than the jobless rate: Ronald Reagan won 49 states in 1984 with unemployment at 7.4%.
That makes Friday’s jobs report for May the first of a series of critical readings, said Jared Bernstein, Vice President Biden’s economic adviser in 2009 and 2010.
“All of the reports will become increasingly important,” says Douglas Holtz-Eakin, Republican John McCain’s top domestic policy adviser in the 2008 presidential campaign.