President Barack Obama seized on an unexpected decline in the unemployment rate to talk about an improving economy and reset his campaign after a tepid debate performance against Republican Mitt Romney.
“It’s a reminder that this country has come too far to turn back now,” Obama said yesterday as he and Romney dueled over the report’s significance in Virginia, one of the states both campaigns see as crucial to deciding who wins the election.
The Labor Department report showing the jobless rate fell to 7.8 percent, the lowest since he became president in January 2009, “certainly is not an excuse to try and talk down the economy to score a few political points,” Obama said at a rally at George Mason University in Fairfax, a Washington suburb.
Unemployment (USURTOT) had remained at 8 percent or higher since February 2009, the longest stretch since monthly jobless figures were first compiled in 1948.
“It’s good news for Obama,” Alan Abramowitz, a political scientist at Emory University in Atlanta, said after the government reported the September figure. The drop in unemployment to under 8 percent is “symbolically important” to voters.
Romney, addressing more than 3,000 voters in Abingdon, said the jobless rate “has come down very, very slowly,” this year, and mostly as a result of people abandoning the search for work.
“So it looks unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, why, our unemployment rate would be around 11 percent,” Romney said. “That’s the real reality of what’s happening.”
The portion of the population either employed or actively applying for jobs, which in August reached its lowest level since 1981, rose last month, according to the Labor Department. The economy has added 4.3 million jobs since February 2010.
Romney spoke at a mining equipment supply company in an area of southwestern Virginia that has been stung by coal industry layoffs, most recently with an announcement by Bristol-based Alpha Natural Resources (ANR:US) that it would slash 1,200 jobs and shutter several mines. Romney met with five recently laid-off coal miners before the rally, his campaign said.
Abramowitz said the stronger-than-expected jobs report probably will dominate news coverage for several days and blunt the momentum Romney picked up from favorable reviews of his performance in the Oct. 3 presidential debate.
Forecasters had expected the jobless rate to rise to 8.2 percent from 8.1 percent in August, according to the median prediction of economists surveyed by Bloomberg News. The rate had fluctuated between 8.1 percent and 8.3 percent since the beginning of the year.
Since last September, the jobless rate has dropped 1.2 percentage points. The only election year in which unemployment fell more during the same period was Ronald Reagan’s 1984 re-election, according to the government’s records.
The Labor Department’s survey of employers showed the economy added 114,000 jobs last month. Revisions to the two previous months’ data added another 86,000 jobs. Hourly earnings also rose more than forecast.
A separate survey of households, from which the unemployment rate is computed, showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual census population adjustments. About 582,000 Americans took part-time positions because of slack business conditions or those jobs were the only work they could find.
The household survey may be more accurate at turning points in the economy because it is more likely to pick up hiring and firing at small companies and new firms that may not be covered by the survey of employers. Still, the household survey is much smaller and the results are more volatile month-to-month, according to Bruce Kasman, chief economist at JPMorgan Chase & Co. in New York.
The Standard & Poor’s 500 Stock Index (SPX) fell less than 0.1 percent to 1,460.93 at 4 p.m. in New York yesterday, after climbing as much as 0.7 percent. The benchmark index increased 1.4 percent during the week as U.S. economic reports topped estimates. The Dow Jones Industrial Average added 34.79 points, or 0.3 percent, to 13,610.15.
Late in Campaign
The political boost for Obama probably will be subdued because it comes so late in the campaign, when most voters’ opinions of the economy and candidates are entrenched, Abramowitz said. He created a forecasting model based on economic indicators and poll data that has predicted the popular-vote winner in the past six presidential elections.
Abramowitz’s “Time For Change” model forecasts a 67 percent probability that Obama will be re-elected and projects a victory margin of 1.2 percentage points, based on data before the release of yesterday’s employment report.
Romney has blamed Obama’s stewardship of the economy for persistent high joblessness as the nation recovers from the worst recession since the Great Depression. Obama has emphasized progress on the economy and pleaded for more time for his policies to work. Romney’s economic approach favors the wealthy at the expense of middle-income families, Obama says.
“I have seen too much pain and too much struggle to let this country go with another round of top-down economics,” Obama said yesterday at a rally in Cleveland.
No president has won re-election since World War II with an Election Day unemployment rate higher than 7.2 percent, the jobless number when Reagan won his second term. Still, the trajectory of the economy historically has exerted the greatest influence on voters.
Obama was ahead of Romney, 49 percent to 43 percent, among likely voters in a Bloomberg National Poll conducted Sept. 21-24.
Like Reagan did in 1984, Obama points to a turnaround of the declining economy he inherited from his predecessor.
Consumer confidence has grown recently as home values improve, stocks rise and gas prices stabilize. The Bloomberg Consumer Comfort Index (COMFCOMF) climbed in the week ending Sept. 30 for the sixth straight week, the longest such stretch since early 2006.
The better job opportunities that the economic recovery has offered to more educated workers also has benefited Obama, because of the voter coalition of minorities and college-educated whites from which he draws the most support.
Unemployment among whites with bachelor’s degrees was 3.7 percent in September, less than half the national average. Among whites with some college education or with an associate’s degree from a community college, the jobless rate was 6.3 percent, down from 7.8 percent a year earlier and from 8.8 percent two years ago.
“It’s kind of overlooked in the larger numbers, and it explains a lot,” said Steven Jarding, a professor at Harvard University’s Kennedy School of Government and a former Democratic political consultant.
Obama’s support among blacks and Hispanics is based more on issues such as civil rights and immigration, while the jobs situation is more salient to many of Obama’s white supporters.
Obama led Romney 49 percent to 45 percent among college-educated whites in the Bloomberg poll of likely voters. Support for Obama dropped to 42 percent among whites with some college education and to 37 percent among whites with a high school education or less.
Voters with at least some college education “haven’t necessarily prospered but they’re doing OK,” Jarding said. “Romney may be the one that looks like the bigger risk to them.”
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