There’s little time left in the 2012 presidential campaign for a momentum-shifting “game changer.” But tomorrow’s job report might be just such an event. The major — and somewhat mysterious — drop in the unemployment rate last month, to 7.8% from 8.1%, gave a much-needed political boost to the Obama campaign. On the surface, it showed a labor market suddenly gaining Wolverinesque healing abilities. It also stripped GOPers of great talking point.
But what if the data tomorrow show the September number to be an anomaly? It could happen, says Stephen Oliner, an AEI economist and former Federal Reserve senior adviser:
Payroll employment likely continued to grow slowly in October, posting a gain of about 125,000. In the separate survey of households, I expect the puzzling surge in employment that was reported last month to be followed by a decline in October. Similarly, I anticipate that the unemployment rate will move back up to 8 percent after the surprising drop in September. Overall, the report will portray a labor market that remains weak.
Washington watchers like Greg Valliere of Potomac Research, for instance, think such a result would boost Team Romney. As Valliere put it in a research note this mornning, “But momentum is fickle, and it could shift once again after release of tomorrow’s unemployment data. … A weak number could give Romney a boost in the campaign’s final weekend.”
The consensus, according to a survey by Reuters, is for gains of 125,000 with an unemployment rate of 7.9%. So Oliner’s forecast is right in the zone. Given a) slow GDP growth and b) the chill in business investment and confidence, an employment surge would be a shocker.
But keep in mind that job gains of 125,000 or 150,000 or even 175,000 do little if nothing to close the 13 million job gap between where where employment should be and where it is. We are only getting trend jobs growth, just enough to deal with population growth –but not enough to close the yawning chasm. The Long Recession grinds on.