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Obama’s re-election fortunes ride on rising economy
Jobless rate down, stock markets up
President Obama’s re-election prospects are getting a boost from the plunging unemployment rate and the pickup in the economy and financial markets this year, economic and political analysts say.
The economic improvement since the middle of last year has been marked, with unemployment falling from more than 9 percent to 8.3 percent and economic growth rising from less than 1 percent to healthy annual rates closer to 3 percent. All this prompted a solid rally in stocks that, by the end of last month, had pushed the Dow Jones industrial average to more than 13,000 for the first time since 2008.
While threats remain and all sides agree that the economy still has far to go to recover all the ground lost during the Great Recession, the unexpected and sometimes startling gains bode well for an incumbent coming so close to the election.
Especially helpful to Mr. Obama was evidence last month that, thanks to an acceleration of job growth, the lower jobless rate held up despite a surge of nearly a half-million new job seekers into the market looking for work.
“More jobs are popping up here, there and almost everywhere,” said Sung Won Sohn, an economics professor at California State University Channel Islands. “President Obama, facing a tough election this year, is smiling.”
Behind the fall in unemployment was a significant pickup in job growth in the past three months to nearly a quarter-million new jobs a month. That exceeds the average growth rate during the 2000s expansion and is strong enough to keep drawing down the unemployment rate if such growth continues this year. Some economists are predicting unemployment will fall to 8 percent or below before the election.
“To be sure, it is not a home run,” Mr. Sohn said of the monthly job totals, but rather the economy is hitting “solid singles” that are adding up in a significant way. “Employment gains are feeding upon itself, pointing to a durable recovery,” he said.
Marcus Bullus, trading director at MB Capital, said the robust job performance is an elixir for the financial markets.
“With such strong data, the bulls will feel vindicated, the president relieved,” he said.
“Day by day, we are restoring the economy from crisis,” he said, contrasting the recent job performance with the hemorrhaging of 600,000 jobs a month in the weeks before he took office in 2009.
Republicans counter that the unemployment rate remains too high and the rate of underemployment — including discouraged workers and those working part time who want full-time jobs — remains near 15 percent.
Moreover, if those idled workers continue to venture back into the job market in hopes of finding work, as some did last month, it will require thousands more jobs to keep the unemployment rate from rising again, said Douglas Holtz-Eagan, a Republican economic adviser and former Congressional Budget Office director.
“The focus has shifted to whether the unemployment rate will drop under 8 percent by Election Day,” he said. “It is not going to happen” if nearly 4 million underemployed workers start looking for jobs again, he said.
But even Mr. Holtz-Eagan conceded that at the current rate of job growth, achieving 8 percent “does not appear to be much of a stretch.” He suggested that the surprisingly strong growth in jobs this winter was artificially boosted by unusually mild weather, and some of the gains will be retraced in coming months.
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