A sudden decline in the U.S. unemployment rate below the 8-per-cent level is a blast of good news for President Barack Obama, helping him regain his footing after a listless debate performance against Republican nominee Mitt Romney.
Breaking through the 8-per-cent barrier deprives Mr. Romney of one of his sharper talking points and represents a symbolic number for Mr. Obama.
The U.S. Labor Department reported Friday that the national jobless rate fell 0.3 percentage points to 7.8 per cent in September, putting it almost exactly where it stood during January, 2009, the month Mr. Obama took office.
The rate peaked at 10.2 per cent in late 2009, but has edged downward with the creation of 5.2 million private-sector jobs since early 2010. The total number of non-farm jobs in the United States is just 61,000 below the number at the time of Mr. Obama’s inauguration.
A 7.8 per cent unemployment rate still leaves Mr. Obama vulnerable. No incumbent has won re-election with a rate this high since Franklin Roosevelt during the Depression. But with the election only a month away, the President suddenly has a better story to tell and his rivals know it.
Republicans scrambled to explain away the September jobs report, with some even suggesting that Labor Department officials had cooked the books or that thousands of Obama sympathizers had lied about having a job to help the President’s re-election chances.
Administration officials tartly dismissed such ideas as “ludicrous” and “absurd.”
“Today’s news should give us some encouragement,” Mr. Obama countered at a campaign rally in Cleveland. “It shouldn’t be an excuse for the other side to try to talk down the economy just to try to score a few political points. It’s a reminder that this country has come too far to turn back now.”
Campaigning in Virginia, Mr. Romney attributed the decline in the unemployment rate this year to “the fact that more and more people have just stopped looking for work.” Had they still been in the labour force, he added, the jobless rate would be around 11 per cent.
“When I’m President of the United States, that unemployment rate is going to come down, not because people are giving up and dropping out of the work force, but because we’re creating more jobs,” the GOP nominee insisted.
Rarely do presidents win re-election without economic momentum at their backs. When the unemployment rate was at 9 per cent in February, 2011, Hamilton Place Strategies, a Washington-based consultancy, began a monthly jobs scorecard, saying Mr. Obama could claim progress on the economy if the jobless rate dropped below 8 per cent by election day.
Russ Grote, an analyst at Hamilton Place, called Friday’s report an “economically significant milestone” and predicted a raft of positive headlines that will boost Mr. Obama’s campaign.
Yet Mr. Grote backed away slightly from the firm’s prediction that an unemployment rate below 8 per cent would return Mr. Obama to the White House.
Still, the better-than-expected jobs figures signal forward momentum.
That was not evident a few weeks ago when the Federal Reserve launched its most aggressive stimulus measures since the financial crisis.
“We hit a soft patch; it seems now we are back on track, and sooner than many expected,” said Stéfane Marion, chief economist at Montreal-based National Bank Financial.
The U.S. Labor Department reported that 418,000 people entered the work force in September, bringing the total number of Americans with a job or looking for one to 155.1 million.
An astonishing 873,000 more Americans reported having a job in September compared with August, leading some economists to suggest the figure could be revised downward when the government releases the next jobs report just before the election.
That means the unemployment rate could jump back above 8 per cent by election day.