Tags: Employment | Obama | election

Employment Trend May Be Swing Vote for Obama

By    |   Wednesday, 07 Dec 2011 09:51 AM

With the presidential election still 11 months away, anything can happen.

But history shows that one of the most important factors in an election is the direction of unemployment. If the unemployment rate is dropping, the incumbent party tends to do well in elections.

The level of the unemployment rate is not important, according to studies.

It can be at high levels, and the president can still win re-election as long as the trend is down. It can also be driven down by technical factors or bad estimates, and the president still gets re-elected.

The public is not analyzing the data as much as it is responding to the headline.

Another important economic indicator for election watchers is the Institute of Supply Management (ISM) Manufacturing Index. This is one of the most reliable economic indicators available to forecasters.

The ISM index generally moves in the same direction as the general economy and is useful in spotting stock market turns. It has recently been shown to be the most accurate economic indicator to forecast presidential elections.

Both indicators delivered good news for Democrats in the first days of December. Unemployment dropped sharply and the ISM increased to a level consistent with GDP growth of more than 3.5 percent.

Unemployment data is subject to large revisions. In recent months, the trend in revisions has been towards a higher number of jobs, meaning that the initial report understated job growth. This has been seen at other turning points when the unemployment rate was beginning to show a sustained decline. Recent revisions are consistent with the unemployment rate dropping further.

Current economic trends point to an Obama victory in 2012. There’s a long way to go, but watching unemployment and the ISM index will offer clues as to what the ultimate outcome will be.

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MichaelCarr
With the presidential election still 11 months away, anything can happen. But history shows that one of the most important factors in an election is the direction of unemployment. If the unemployment rate is dropping, the incumbent party tends to do well in elections....
Employment,Obama,election
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2011-51-07
Wednesday, 07 Dec 2011 09:51 AM
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