The Democratic National Convention was a roaring success. Add to that the drop in the headline unemployment number from 8.3 to 8.1 percent this morning, and it looks like it will be a good month for the President.
Of course, Europe could still go off the rails, and next month’s job numbers may be weaker.
But for the moment, it appears that Obama may win a large victory over Romney, as the rabid Republican base repels independents, whose votes will determine the election in most swing states.
The main goal of the Democrats was to argue that, far from being a party of the extreme left, of pinkos and radical feminazis and welfare shirkers, as they are painted by Rush Limbaugh, Ann Coulter, and other conservative media mouthpieces, they are the party of the center, of the middle class, in tune with the great majority of Americans and their aspirations and values. What the Democrats want to show is that it is the Republican Party that has become extreme and out of touch with ordinary Americans – that as Charlie Crist said last night, it is the Republican Party that has moved away from where Reagan Americans stand.
It seems to me that the two conventions went far to making the Democrats’ point. From the GOP party platform, which wants to prohibit abortions even in case of rape or incest, a position now wholly out of sync with mainstream views, to Bill Clinton’s defense of Obama as the ultimate centrist carrying on his tradition of compromise and bipartisan progress, the messages were clear. The GOP said – we’re in this for ourselves to push our viewpoint of what is wrong with this country, and we want to make sure no one punishes our success. The Demos said – we’re in this for you to push for more opportunity for Americans, to help more Americans who are struggling to succeed.
I could be wrong, but if I read this right, Obama may not only win but get the coattails to shake up Congress, and be in a stronger position to win legislation in his second term. The ringing cheers of “USA, USA, USA” at the DNC seemed more sincere patriotism than the slashing attacks on the status quo delivered by the GOP.
The GOP charges against Obama, even those that are made up (maybe especially those) just won’t stick. If Obama is so bad for business, why is the stock market at a 5-year high? When Bush left office the Dow stood below 8,000. Today it is up by 5,000 points, standing at over 13,000. How can that be if the Obama administration has been so bad for business? The truth is that the Obama administration and the Obama years have done everything possible to restore American business after it ran off a cliff under the Bush administration. Obama has kept faith with his promise to restore the fortunes of American private business. But American private business has not kept faith with Americans to hire people and reward rising productivity with rising wages and benefits (see this story on Caterpillar Industries).
This is pretty sticky stuff for Governor Romney, who as Joe Biden said, has to travel abroad to visit his own money. How can Romney ask for tax cuts for the rich to create jobs, when he himself doesn’t even invest all of his own riches in America?
It is going to be interesting to see what kind of ammo Romney brings to the debates. Facts and fact-checking can matter much more in a debate than in campaign ads, and the Romney cupboard may be bare of facts to use against Obama in the coming weeks. A couple more months of positive job numbers, even small gains, and Romney may be left shooting blanks.
Some feel that the headline unemployment number could even drop another couple of tenths, to 7.9%, before the election. If so, that would allow Obama to state that he has brought the unemployment rate under 8%, as promised.
Of course, those of you who read this blog know that I have been predicting a slow-down, not recovery for the US economy. And in fact, below the headline, that is exactly what the jobs report showed. The gain in jobs reported for both June and July was revised downward sharply: June’s job increase was revised down by about one-third, and July’s number was revised down by 15%. Altogether, the downward revisions in these months totaled 43,000 jobs, offsetting almost half of the 96,000 new jobs reported for August. The fact that the August job number is still way, way below the revised July number of 141,00 new jobs shows that the economy is losing steam, not gaining it.
The only reason the headline unemployment rate dropped is because so many discouraged workers stopped looking for work. 368,000 people left the labor force – more than three times as many as found work – bringing labor force participation to its lowest rate since 1981.
Still, there is a silver lining to this as well, at least for the President. The Fed will be reading these job participation rates, and may well decide that since the underlying job creation machine is still in reverse, they need to flood the markets with liquidity, the much anticipated Quantitative Easing Round 3. If they do so, it will lift the stock market for a while, put some more credit in consumers’ pockets, and maybe encourage businesses to hire a few more folks. Meanwhile, more of those long-term unemployed whose benefits are running out but cannot find work will likely drop out of the labor force, further pushing down the headline unemployment number.
So, if things work out, the President could slide into November with the stock market up and unemployment down. For the Democrats, what’s not to like about that?