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Nov. 14 (Bloomberg) -- Less than 12 months from the presidential election, the U.S. economy has moved from recovery to expansion, prompting similar shifts in President Barack Obama’s political prospects.
The unemployment rate moved downward last month, to 9 percent. The number of Americans filing applications for unemployment benefits fell to the lowest level in seven months two weeks ago, a sign the recovery may be encouraging companies to limit cuts in headcount. And a private outplacement company is predicting that jobs losses in the government sector, a drag on U.S. employment, may be leveling off.
Gains in household spending, the biggest part of the economy, last quarter led economists to raise their growth forecasts for the remainder of this year and for 2012, the median estimate in a Bloomberg News survey showed last week. The services industry and manufacturing both continue to expand, according to figures this month from the Institute for Supply Management.
Vowing to be a “warrior for the middle class” Obama has struck a populist message on job creation this fall that seems to be breaking through with voters. His job-approval rating has climbed by five points in one survey and he’s seen his daily Gallup Poll tracking numbers approach 50 percent.
‘We Can’t Wait’
“Obama has finally hit the right balance with ‘We Can’t Wait,’ in signaling to voters that he understands, and is working to alleviate, their struggles,” said Bob Shrum, a Democratic strategist. “The basic matrix should be that we’re making progress but we have a lot more to do,” he said.
The change in Obama’s standing comes as the Republicans are still vetting presidential candidates. Less than two months before the first primary contest in the Iowa caucuses, none of the Republican contenders is consistently receiving more than 30 percent of their party’s support nationally.
“Anyone who thinks that beating President Obama will be easy is delusional,” said Steve Duprey, a senior adviser to Senator John McCain’s 2008 presidential campaign and a former Republican Party chairman in New Hampshire. “President Obama has proven that he is the best fundraiser in the history of American elections, his team is smart and technologically savvy, and he has a unified party.”
White House View
White House officials are girding for an election they anticipate will be contested over an economy that was contracting at a 6.7% percent annual rate when Obama was inaugurated in January 2009 and that they predict will grow at 2.9 percent in 2012.
No president since 1936 -- when Franklin D. Roosevelt won his second term -- has been re-elected with unemployment above 7.2 percent. Though that was the rate when Ronald Reagan won re- election in November 1984, the economy also was growing at 7 percent at the time.
Before a Republican nominee emerges, Obama is sharpening his message that Republicans are doing nothing to expand jobs.
“The president has been fighting every day to create jobs now, restore economic security for the middle class, and build a fairer economy that rewards hard work and responsibility,” said Ben LaBolt, Obama’s campaign spokesman. The Republican presidential candidates are “proposing a return to the same policies that led to our economic challenges.”
Obama’s standing in polls, while improving, has not moved into positive territory.
In the daily Gallup tracking survey, Obama ended last week with a 47 percent approval rating, up from 42 percent at the beginning of October. In a Quinnipiac University poll of voters conducted Oct. 25-31, his job-approval rating climbed six points, to 47 percent from 41 percent in survey released Oct. 6.
At the close of the Asia-Pacific Economic Cooperation summit in Honolulu, Hawaii, Obama said yesterday that world leaders “continued our efforts to get the global economy to grow faster.”
“If Europe has a major recession,” he said “that will have a direct impact on U.S. growth and our ability to create jobs and people raising their living standards.”
The economy added 80,000 jobs in October as the unemployment rate dropped to the 9 percent figure from 9.1 percent in September. Private hiring in October, which excludes government agencies, rose by 104,000 after a revised gain of 191,000 in September.
The outplacement firm Challenger Gray & Christmas Inc. reported that government sector lay-offs slowed to a near halt last month, signaling that one of the drags on hiring may be ending. Government entities announced 2,785 job cuts in October, down from 54,182 in September, a 95% drop, bringing the sector’s job-cut total to its lowest level since January 2009.
“It looked like the economy was flashing red” in July, August and September, said John Challenger, the firm’s chief executive officer. “Now it’s back to flashing yellow, or at least that weak green mode since the recession ended.”
The White House’s internal forecasts expect that the jobless rate will average 9.1 percent in 2011 and show little change at 9 percent in the election year, according to the Office and Management and Budget Sept. 1 review.
The unemployment rate during the fourth quarter next year will average 8.7 percent, according to the median forecast among 75 economists surveyed by Bloomberg between Oct. 5 and Oct. 11. They expect growth to average 2 percent for the year.
“It may be that, quote, ‘Prevented a second Great Depression’ does not read well on a bumper sticker,” Gene Sperling, director of the White House’s National Economic Council, said Oct. 31 at the Economic Club of Washington when discussing Obama’s record. “But it is an appropriate description of policy choices that dramatically improved and helped the lives of tens of millions of our fellow working families and the global economy.”
--With assistance from Timothy Homan in Washington. Editors: Jeanne Cummings, Don Frederick
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