I wonder if even the improving employment situation is good enough for Obama's re-election. I say this after reading most of Chapter 6 of the 2012 Economic Report of the President, "Jobs and Income: Today and Tomorrow."
I'm not making any comment on the policy or fiscal impact of Obama on the economy. Rather, I'm looking at the current employment situation and wondering if even an improving economy will be enough for Obama to win.
This is the chart we all know and dread, the unemployment rate. The usual remark from Obama supporters is the trajectory is the only thing that matters, and they point to the Reagan re-election in 1984. But every election is unique. While employment was high during Reagan's re-election, it was coming down, and coming down sharply. Also inflation, (not pictured) was also coming down sharply. Size nor trajectory are all that matter.
This chart is also familiar to many of us, and shows the median duration of unemployment and the percent of long-term unemployed. Something definitely is different about this recovery. Even with unemployment coming down, the long-term unemployed is high and the amount of time the unemployed are unemployed is also high.
What hasn't been happening in this recovery is the normal amount of labor market movement. In a normal economy there is a lot of labor force movement. People quit their jobs; they find new jobs. Prior to the recession there were about 5 million people per month leaving jobs and finding jobs. This fell to less than 4 million per month during this recovery and just hasn't bounced back. People are stuck. I look at the decline and think of it as fewer opportunities for everyone, not just the employed, to move. I'm wondering if there isn't some impact from housing prices and owners being unable to move because they are upside down on their mortgages. I've read some studies disputing this, but I'm not ready to reject the theory.
So I wonder how the electorate reacts to this. Is it enough that unemployment is coming down? Is it coming down fast enough? Is long-term unemployment too high. Is there enough activity in the labor force for people to feel like there are opportunities to move?
I still think Obama is the favorite to win. But...