Chris Cilizza and Aaron Blake warn President Obama that he’s running out of time:
The Bureau of Labor Statistics released its July jobs report this morning — an assessment that didn’t exactly show considerable growth in the economy over the past month. And from a political perspective, that means one thing: President Obama is running out of time.
Why?
Because polling — both in this campaign and in past races — suggests that public perception on major issues (economy, Iraq, etc.) cements several months in advance of the actual vote, barring some sort of cataclysmic event.
The consistency of Obama’s numbers on the economy is remarkable. Not since 2009 has a majority of Americans approved of how Obama is handling the economy in Washington Post-ABC News polling Couple that fact with the sustained pessimism about the direction of the country and faltering economic confidence ratings, and you get a very dangerous political brew for Obama — particularly this close to an election (95 days!).
What all of the data cited above mean is that, while there will be three more monthly jobs reports prior to voters voting, it may not ultimately matter what they say, unless of course they show massive gains (or losses).
To be honest I think the president has already run out of time. No action taken now is likely to have any effect within the next 90 days. The die is cast.
I recognize that the Obama Campaign’s strategy is to turn the election into a referendum on the other guy, an effort that I believe is futile. The election will be in good part a referendum on the president and the question that faces voters in November will be just how desperate they are to give someone else, anyone else, a chance.
I guess I’m a bit surprised that Obama did not reveal a large Krugmanesque jobs bill in the Spring and used it to run against Congress for the rest of the year. It wouldn’t have to pass; it would just need the support of the pundacracy. Instead we get a push for Clinton’s top-level taxes, which looks positive to Democrats, but nobody else.
I wonder if the problem was that such a jobs bill would essentially be a form of talking down the economy? Are polls showing debt to be a bigger concern for the electorate than jobs? Is the economic team too focused on the financial sector, particularly the arduous task of design and implementation of Dobbs-Frank? Does Obama believe his mission is to make raising taxes cool again?
Is it now safe to mention that if Mitt Romney, it will be far from close? Occasionally, reality has a way of crashing the party, and it is bad manners. In polite society, reality is the “turd in the punch bowl”.
Actually, I think that if the Republicans were running a candidate stronger than Romney it would be a lot less close but that it will, indeed, be close in November. All other things being equal.
PD:
I can only speculate. I think that every president has a core value. Something which he will promote in his presidency even if everything else goes by the wayside.
For President Obama I think it’s equality or, perhaps, most people being equal under the benign leadership of philosopher-kings. There are two ways to accomplish equality: improving the lot of those at the bottom of the heap or pushing down those at the top of the heap.
BTW, the strategy you suggested sounds very much like the one I’ve suggested from time to time. That President Obama did not elect to do that is, I think, consistent with the remainder of his presidency: he’d rather not propose anything at all than propose something and have it fail. “He either fears his fate too much, etc.”
@ PD Shaw,
The administration and its economic advisors do not support jobs programs, period. Neo-liberal economists argue (without evidence) A) that giving every unemployed person a government job would create damaging inflation B) the economy needs a buffer stock of unemployed to meet shifting market demands and C) by tolerating high levels of unemployment wages can be further suppressed and “competitiveness” restored (never mind that with forty years of wage suppression the U.S. is less competitive than ever, as evidenced by $500-$600 trillion trade deficits).
Obama and his people are ideologically opposed to full employment.
@Ben Wolf
Obama and his people are ideologically opposed to full employment.
I assume you mean the outcome of their ideological positions, and you may want to revise this statement. Otherwise,
“Blaze it up, blaze it up!”
NSF
The most optimistic comments about today’s jobs report is that it shows a ‘modest’ improvement. Other than that some of the internals, such as 150,000 people who have stopped looking, is not all that great. So, why is the stock market going up today — over 200 at the moment?
@Tastybits,
No, it’s not that unemployment is the logical outcome of their ideology, it’s that their ideology considers an unemployment buffer to be a good and desirable thing.
@Jan
Some of the gain is a response to several days of cumulative losses, some of it is from dummies always trying to get ahead of the curve. For example, I’ve lost count of how many times stocks have surged higher as Europe announces a new plan that will fix everything, only to crater a couple of days later when it gets through people’s heads the plan is stupid. Look how stocks and futures climbed when the head of the ECB announced a week ago he would do whatever was necessary to save the euro. Markets have since fallen as people woke up to the fact that he provided no specifics at the time and STILL hasn’t.
Thanks Ben, I appreciate your response.
I don’t have a grip on stocks, whatsoever. They honestly baffle me, as I’m always attempting to find a rhyme or reason for their gains and losses. My father-in-law’s sage advice was to leave one’s portfolio alone, and just let the ebbs and flows of the market not prompt knee-jerk responses. That’s what we’ve basically done….we road out ’08, and are pretty much back where we started. But, this is due to no genius moves, just hanging tough and not over-reacting.
@Jan
In my opinion there are two basic ways of investing in stocks. There’s the tried and true method of finding solid companies you think will grow and investing in them for the medium to long-term. When you invest like that you’re contributing to real economic growth and productive output, which is what finance is really all about.
Then you have the wheeling, dealing, let-it-ride mentality which is all about asset valuation. These traders are hoping to get out in front and find stocks which they think are seriously undervalued. Their goal is to dump those stocks quickly once the valuation goes up and make a profit on the difference, to buy low and sell high. Now there are some people out there who do this successfully, but ultimately it’s a gambler’s strategy rather than an informed, well-researched choice of the fundamentals. Speed is critical here, which is why we have day-trading and flash-trading. In my experience a lot of small, middle-class investors fall into the second category. They don’t really understand the system or the products and are looking for a lottery jackpot, so their trades are usually in reaction to some story in the 24-hour news cycle and can bounce all over the place.
Ben
I then would classify myself and husband in the first class — long term, which creates a lot less brain pain in attempting to figure out market gyrations, by stepping out in front, and then soundly being hit by a bus of unforeseen consequences.
Are you a broker, by chance? Your posts seem to have a well-rounded grasp of business.
@jan
I’m not a professional broker, I’ve just spent time in varying parts of finance over the years and used my free time learning all I can. Warren Buffet became a billionaire largely by “betting” on companies he heavily researched and believed in, and has always recommended that strategy to novices. If you’re hinking about getting your feet wet, approach your potential investment as something you want to OWN, to hold as a real asset. Go with an industry you know something about, then pretend you know nothing and spend the next three months studying it. You’ve got plenty of time, this is NOT a market friendly to buying equities, so focus on being ready when we finally get out of the trough.
No action taken now is likely to have any effect within the next 90 days. The die is cast.
The problem the President has is that he doesn’t appear to have any kind of plan at all. (“Tax the rich!” isn’t a plan.) He’s floundering.
The problem the Republicans have is that they truly seem to be advocating just more of the stuff Bush was doing. Cut taxes for those paying them (which means for the rich, primarily), spend more on defense and make vague promises about limiting the size of government. Mostly smoke and mirror type stuff that people are far less inclined to buy into these days.
I have to laugh at all the talk about “if only the Republicans were running someone better than Mitt….” Who would that be? Ronald Reagan’s dessicated corpse? ‘Cause it sure ain’t the other guys available now. The candidates that ran in the primaries and lost were all exposed for the problematic candidates they were. The ones that didn’t run all had problems that made it bad bet to even bother running this time. (Or at all, really.) That mythical Republican savior just doesn’t exist.
Which reminds me that I was laughing back in 2009 and 2010 when various self-described conservatives were talking about how Obama’s Presidency could lead to the next Reagan. They all seemed to forget that Reagan didn’t spring from the ground wholly formed after Carter was sworn in, but had been working his way to the top of the Republican heap for about 20 years by the time he secured the nomination in 1980. Who’s out that there fits that description? That Reagan-esque savior isn’t riding in from the horizon, and neither did Reagan.
Are you better of than you were 4 years ago…or even just last year? If the answer is no for enough people Obama is toast.
And yes, given lags in the economy, nothing Obama does now will matter. George H. W. Bush anyone? Back then the economy was in recovery mode many months before the election and Bush still lost on the economy.
Lol wut? Who has said this. And what is a neo-liberal economist?
Are you talking about neoclassical economists or marxists and their reserve army of the unemployed? I don’t think I’ve come across this notion on any blog/paper/article from Mankiw to Thoma to Hamilton.
Who has said this? Mankiw? Lucas? Prescott? Buchanan? Romer (Paul, David or Christine)? Ball? Blinder? Taylor? Slemrod? Arrow? Solow, Tobin, or Ostrom? Was it Long, Plosser, or Blanchard? Maybe…no…was it Krugman? Just curious as which economists have said this.
I’m curious how you see this being the result of neoclassical economic theory. I don’t see it at all personally. After all, how does a country remain competitive when a “high level” of its work force is unemployed. Maybe it is a result of monetarism, or is it Neo Keynesianism? New Keynesianism? New Classical? Real Business Cycle Theory? Hmmm…oh, public choice thoery? How about endogenous growth theory, is this competitiveness argument a result from that?
But then again, you’ve said I don’t know anything about economics….although oddly I do seem to be aware of a large number of economists and much of their writings….funny that.
“At any moment of time, there is some level of unemployment which has the property that it is consistent with equilibrium in the structure of real wages … The ‘natural rate of unemployment’ … is the level that would be ground out by the Walrasian system of general equilibrium equations, provided there is embedded in them the actual structural characteristics of the labour and commodity markets, including market imperfections, stochastic variability in demands and supplies, the costs of gathering information about job vacancies, and labor availabilities, the costs of mobility, and so on.â€
The idead of a “natural” rate of unemployment began with the work of Friedman and Phelps, asserting that given frictional and classical unemployment a unique non-inflationary level would naturally emerge. They also asserted that any attempt to stimulate demand by deviating from that equilibrium would result in accelerating inflation. The explicit argument was that it was best for a healthy economy to allow the unemployed to languish.
Critics such as Minsky and Lerner (the dreaded heterodox) pointed out that Friedman and Phelps never produced a model of the theory and provided no mechanism by which the natual rate of unemployment could be projected at any given time. This resulted in the term “natual rate” being largely supplanted by NAIRU, Non-Accelerating Inflation Rate of Unemployment. The point was to make the hypothesis more slippery and better able to avoid criticism by acknowledging Friedman’s accelerating inflation argument, and simultaneously refusing to commit to any form of theoretical explanation or predictability.
Proponents argue that the proper focus of monetary policies should be controlling inflation and not full employment. As this position is endorsed by virtually every mainstream economist from Mankiw to Fama, I find objections by some to be decidedly odd. Mankiw and Ball have worked to develop an approach for determining the NAIRU: in other words, the goal is to determine what level of unemployment governments should pursue at any given time.
“The first issue is whether the concept of NAIRU is a useful piece of business cycle theory. We believe it is, and we begin this paper by attempting to explain why. In our view, the NAIRU is approximately a synonym for the natural rate of unemployment. This concept follows naturally from any theory that says that changes in monetary policy, and aggregate demand more generally, push inflation and unemployment in opposite directions in the short run. Once this short-run tradeoff is admitted, there must be some level of unemployment consistent with stable inflation.”
http://www.nber.org/papers/w8940.pdf?new_window=1