The Unemployment Rate Is Dead
If you listened to President Obama’s speech last Wednesday in Elkhart, Indiana, you’d think America’s economy is just peachy. Then last Friday’s jobs report “landed with a thud.” Employers only added 38,000 jobs last month, while March and April numbers were revised down by a total of 59,000 jobs.
The Obama administration quickly tried to point out the unemployment rate fell to 4.7 percent in May, its lowest level since November 2007. And President Obama continued his economic ‘victory’ messaging the next day by declaring, “We’ve cut unemployment by more than half.”
Yet like the job numbers, the White House spin landed with a thud. That’s because the unemployment rate is dead. It’s dead as a political statistic because it can no longer be used in the vacuum of a campaign talking point and it cannot be divorced from other economic indicators as well as voters’ confidence in America’s future. The decline in the unemployment rate was “owed almost entirely to 458,0000 people leaving the labor force.” Other employment indicators gave more discouraging signs: full-time employment decreased on an annual basis for the first time in three years and temporary job growth decreased on an annual basis to its lowest level in six years.
Adding unremarkable GDP growth and depressed incomes to the mix, you now have economists saying “the probability the U.S. would enter a recession over the next 12 months [has] climbed to 37%, the highest for the current expansion cycle.” In this “new normal,” the unemployment rate is no longer a meaningful indicator of how people are doing economically.
So how does this affect the Presidential election that’s only 153 days away?
Any Democrat that attaches their political hopes to Obama’s economic record and using the “improving” unemployment situation to their advantage will have a very difficult case to make. The unemployment rate has become detached from political reality, the realities of middle-class voters, and the reality of other economic indicators showing that our country is only sputtering along at best. It has put Hillary Clinton and Democrats down ballot in a position where they have no clear message on how to achieve economic prosperity.
As The Wall Street Journal points out, “Political scientists point to two gauges that rise above the rest in determining whether the incumbent party can hold the White House: the president’s approval rating and the economic growth trend in the first half of the election year.” But when it comes to President Obama’s job approval and economic record, it won’t be the asset that Hillary Clinton thinks it is.
Clinton has placed her bets on President Obama’s personal popularity and his economic record. But there’s a reason Donald Trump’s message (“Make America Great Again”) and Bernie Sanders’s slogan (“A Future We Can Believe In”) resonated with many voters this year. First, voters perceive that our economy has not improved or has gotten worse even while the Democrats tout the falling unemployment rate. Second, the economic indicators outside of the traditional unemployment rate show that perception is reality. Third, voters are hungry for a message that focuses on the future.
As the economy continues to be voters’ number one issue of concern, Clinton has put herself in a position where her economic message will be muddled and confuse the electorate. Even if the unemployment rate continues to go downward, people leaving the work force will continue to be a factor. A new survey shows “43 percent of the jobless said they have given up” on looking for work and “59 percent of those who have been out of work for two years or more say they have stopped looking.”
In Elkhart, President Obama stuck to his “Bush-blaming” tactics, attempting to remind voters how bad things were eight years ago. It’s a message Clinton is likely to echo. But if economic indicators continue to trend downward, she will inevitably make a sharp pivot from a full embrace of President Obama’s economy.
But where will she pivot? Clinton has the impossible mission of courting both “Bernie or Bust” voters and ticket-splitting independents, both of whom are unhappy with the economy. If she tacks towards the middle to gain those ticket-splitters, she will head into November with a deeply divided Democratic electorate. If she embraces Sanders’s left-wing economic populism, she risks losing voters that will decide this election.
Voters are constantly shown plans and policy proposals. But what they are really thirsting for is someone to be honest with them about the state of the economy. And the unemployment rate can no longer be the foundation of any honest assessment.