Jobs Preview: Clinton vs. Obama
By Tony Fratto, (202) 822-1205, tfratto@hamiltonps.com
View Jobs Day Cheat Sheet here.
On the (tar) heels of the DNC convention and only two months from Election Day, tomorrow’s jobs report looms as an important moment for framing the homestretch of the campaign. Either campaign could use Friday’s job numbers to seize momentum after the conventions.
This week at the Democratic convention, the Obama campaign has been trying to rebrand President Obama’s first term as President Clinton’s third term, with a focus on the 4.5 million private sector jobs created since the jobs recovery began in 2010. It’s an imperfect comparison, not least because while Clinton was greeted by a growing economy, Obama was greeted with a recession.
Peak to trough, the job declines of the early 1990s cost 1.5 million jobs. During Clinton’s first term, the recovery saw average job growth of 240,000 jobs per month. Peak to trough from 2008 to 2010, job declines amounted to nearly 9 million jobs, while the recovery is only generating 138,000 jobs per month.
Obviously, the challenges the two Presidents faced were very different, particularly given the prolonged deleveraging that is currently taking place. Voters, however, are relatively indifferent to these differences. Ultimately, they are grumpy because the current level of job growth is not making a dent in overall unemployment. With new entrants to the labor force, the current jobs recovery is like running on a treadmill, and to this point we haven’t been keeping up.
Friday’s jobs report is unlikely to change Americans’ current assessment of the U.S. economy. The President needs a highly improbable 279,000 jobs per month for the unemployment rate to dip below the 8 percent level by Election Day according to the HPS Jobs Day model. Conversely, it seems unlikely we will see a negative jobs report, as evidenced by recent improvement in weekly jobless claims and a positive ADP report. Consensus estimates are for 125,000 jobs created in August.
Despite the frenzy of the conventions, Friday’s jobs numbers should not result in great political shifts despite great political scrutiny.
Tony Fratto is a Managing Partner at Hamilton Place Strategies, former Assistant Secretary at the U.S. Treasury Department, and a former White House official. He is also an on-air contributor for CNBC.