Why the Jobs Report Upends This Fall's Election
NEW YORK (TheStreet) -- In 2010, the idea that this year's Democrats would tout low unemployment and Obamacare's success in a midterm election would have made Republicans laugh. This year, it's likelier to make them shake with rage.
But it's true. And the math is first-grade simple: Six plus eight = '14.
Friday's jobs report is the clearest sign yet that unemployment will dip below 6% in time for the election, just as it defied forecasts and dipped below 8% in September 2012 in time to finish off Mitt Romney.
That's the six.
The intersection of political math and economic math gets very intriguing as the economy picks up. April's jobs report said employers have added 238,000 workers monthly since February -- even with frozen-tundra weather, including 288,000 in April. Let's say employers add 225,000 jobs a month for the next four months -- a modest goal, given that economists expect growth to accelerate.
That's 1.1 million additional jobs by August -- meaning, the jobs report in early September -- and with a stable work force, that shaves 0.7 percentage point off the unemployment rate.
Think Democrats would like to run on a 5.6% unemployment rate, down from 10% in fall 2009? Think they'd gladly take 5.8%? That gives them two months to publicize the drop before the election, with some wiggle room in case it takes until the Oct. 3 jobs report to happen.
No boom in workforce participation will delay the drop in unemployment -- despite GOP protests. Federal Reserve officials send out mixed signals about participation, partly because the idea that millions of ex-workers will soon resume looking for work, boosting unemployment, is a handy talking point for keeping interest rates ultra-low until wages pick up.
Republicans cite the lower proportion of adults looking for work to claim the unemployment drop is illusory. But April's workforce participation rate, 62.8% of adults, is exactly where it was in December.