Today we got our first honest-to-goodness crappy jobs report in a long time.
The Bureau of Labor Statistics reported that the unemployment rate dropped to 4.7 percent in May. But the economy generated just 38,000 jobs — economists had expected something like 160,000 — and the government revised down its estimates for employment growth in March and April as well. The proportion of people participating in the workforce fell, which is the unfortunate reason for the drop in the jobless rate. And the number of involuntary part-time workers swelled by 468,000.
Granted, this is just one bad jobs report. Granted, it is coming during one of the better years of the recovery. And granted, the economy is arguably healthier right now than it has been at any other point since the Great Recession hit. Even so, this bad jobs report could not be coming at a worse time for Democrats — and a few bad jobs reports like this one could even tip the election to the Orange Man.
Here’s the thing. When Americans are making up their minds about who to vote for, the economy tends to have a huge influence. But voters tend to care most about change in the economy in the year of the election rather than the absolute state of the economy itself. You can see it in this great Nate Silver excavation of the relationship between the economy and voting patterns. Indicators including the change in nonfarm payrolls, change in the unemployment rate, and the ISM manufacturing index — which asks purchasing and supply executives whether things are getting better or worse — tend to predict presidential elections pretty well. The unemployment rate, on the other hand, does not.
“One thing this evidence is fairly definitive upon,” Silver writes, “is that the rate of change is what counts. Americans will give a fair amount of credit to a president in an economy that is still below its full productive capacity provided that it seems to be getting better.”
What we have in this jobs report and other recent government data dumps is an indication not that things are bad, but that they might be getting worse. Jobs growth, movement in the employment-population ratio, GDP growth: not looking good. (The ISM index, to be fair, has picked up.) The unemployment rate, number of jobless: looking great. “The headline numbers are moving strongly in opposite directions,” says Michael Madowitz of the Center for American Progress, reacting to the jobs report. And not in a way that will work out well for Clinton, if they keep it up.
Of course, again, this is just one jobs report, and these numbers tend to be noisy. The massive Verizon strike might have impacted May’s numbers in unexpected ways as well. The White House called the report disappointing, but urged people not to read too much into one report, as it does every month. “In light of both volatility and temporary factors in monthly jobs data, it is important to view this month’s report in the context of both other recent data” and longer-run jobs trends, wrote Jason Furman, the chairman of the Council of Economic Advisers.
But this report really was soft, top to bottom. “The numbers are disappointing because we now have two straight months of low payroll growth, and of dropping labor force participation,” says Harry Holzer, the former chief economist at the Labor Department. “The dropping participation reversed earlier gains where folks were returning to activity after dropping out during the recession.”
Moreover, there are headwinds out there, Brexit and the threat of a Fed rate hike chief among them. And on top of that, we are getting pretty close to full employment — meaning the economy could be perfectly healthy, but jobs growth could slow down, and the unemployment rate could stop falling. But you try to fit “The economy is nearing full employment and therefore we should not expect the kind of declines in the unemployment rate we have seen recently” on a bumper sticker, or make that argument during a stump speech.
No, Democrats should be very worried about this jobs report and the coming ones: No matter how good the economy is, it will be hard for Hillary Clinton to make her case to uncertain voters if it feels like the recovery is deteriorating.
There’s an irony to the situation. Back in 2012, Mitt Romney hammered Barack Obama for presiding over a country with a sky-high unemployment rate and millions looking for work. But the slow-but-steady improvement in the economy proved more important to voters than its abysmal state. The very trend-versus-state dynamics that boosted Obama might hurt Hillary.