New broke in the middle of Friday morning that the unemployment rate had dropped from 8.1% to 7.8%, he lowest rate since President Obama took office. Hooray! Right? It probably depends on which candidate you’re supporting for President. Democrats are trumpeting this as proof that the President’s policies are working: “We’ve made it back through the mess to where we started” has been the general refrain (James Taranto has one of my favorite tweets about this reaction).
I was surprised by the number. I had heard through Twitter that economists expected the rate to remain at 8.1% or jump to 8.2% (less likely) and were not expecting a drop in the number. So when it happened there was some immediate skepticism from the right about the legitimacy of the numbers. Jack Welch, former CEO of General Electric, was one of the first to publicly express some doubts about the numbers. He was promptly blasted by the MSM and praised by hard core government skeptic conservatives. In order to give Jack Welch an opportunity to defend himself, please check out his interview with Chris Matthews, where he explains his opinion fully.
What then do we make of these numbers? First, let us note that conservatives are skeptical of the government. There are some who believe the government is evil, and liberals are quick to claim they represent the majority of those on the right in an effort to discredit them and the right’s attempts to contribute to media coverage. Second, let us note that as President, President Obama has some power to influence things. Jay Cost with The Weekly Standard went through a long list of past presidential election manipulation that is worth reading for the history lesson. And the reminder that Presidents (and Congressmen) will do anything to preserve their jobs. I point this out because we must remember the President, like any CEO, Congressman, salesperson or assembly line worker, is interested in keeping his job. He may be more interested because his directly affects his public legacy unlike any other (think very quickly about your opinions of Jimmy Carter and George H. W. Bush, the last two presidents to lose their reelection campaign. The public psyche assumes they were far lessor presidents that Reagan, Clinton, and George W. Bush because they failed to secure a second term).
Naturally, the Romney campaign has dived into the numbers and expressed skepticism in the validity of the numbers, stating simply “this is not what a real recovery looks like“. The biggest surprise about the BLS report is the discrepancy between the two surveys they reference (and the reason the right is rolling their eyes at this). Again, stated simply, “The Household Survey showed a gain of 873,000 people employed in September – resulting in the surprise drop in the unemployment rate – while the Establishment Survey only showed a rise of 114,000 [people employed].” So one survey shows 114,000 new jobs added, and another showed 873,000 more people employed. Throw in that this is the single largest drop in the unemployment rate in 29 years in a period of time when other economic indicators are showing stagnation across much of the economy, and you can queue the right’s head scratching and, honestly, I think it is completely legitimate.
The president will be trumpeting this for the next month, as he should, and Romney’s response is going to have to be strong. He can state, simply and accurately, that the primary reason for this drop is workforce participation keeps dropping, and he is accurate. How much of this is due to the retirement of elderly workers as the American workforce ages is up for debate (Federal Reserve Bank of Chicago says potentially as much as half). Either way, Romney can argue the rate would be 8.5% is the same people were working now as in January of 2012, and that the rate would be around 10.7%. It is a convincing counterargument if it is heeded, and only time will tell if it is. The heat has been turned up.
Edit: Just had this thought: does this mean President Obama thinks he is vulnerable on the economy and unemployment rate? I would argue yes. Romney probably needs to keep the attacks up.