Over at the American Enterprise Institute, James Pethokoukis modeled the economy and the effect of the economy on the 2012 elections . He calculated what unemployment would look like under 28 different scenarios, varying both job and labor force growth rates to cover the range of possibilities, ad the results look bad if there’s any sort of return to the previous trend, should job growth rates not grow sharply. Even worse for the President, Pethokoukis applied a model by Ray Fair to guess the resulting share of the vote Barack Obama will win based on likely GDP growth rates. Pethokoukis calls the resulting prediction a “close race,” but it actually isn’t. Using Swingometer and some simple math, I think the prediction is one of a nearly 100 EV win for the Republican nominee. Pethokoukis uses Fair’s model to project that the Obama/Biden ticket should get 47.8% of the two-party popular vote in November, if the economy sees 2% growth this year. In 2008, the McCain/Palin ticket received 46.3% of the two-party vote, meaning Obama had a 7.4 point lead. For Obama to get only 47.8% would give the Republican ticket a 4.4 point lead in the two-party vote, meaning the prediction is of an 11.8 point swing from Democrats to Republicans from 2008 to 2012. The Swingometers at Unlikely Voter happen to work with swings in the two party vote. We can take that 11.8 and plug it right in . The result is not particularly close, in my opinion: That’s right: Using the Pethokoukis figures and plugging them into my Swingometer, 2% GDP growth predicts a 316-222 Electoral College victory for the Republicans. Republicans swing Nebraska’s second district, Colorado, Minnesota, Iowa, Indiana, Ohio, Pennsylvania, Virginia, North Carolina, Florida, New Hampshire, and even Maine’s second district. I don’t call that a close contest at all. 94 EVs would be the biggest Republican win since 1988. We can’t really expect old-fashioned blowouts anymore, though. In 1956, 1964, and 1980, the parties and the nation were less polarized on the issues and on philosophy. There were conservative Democrats and Rockefeller Republicans. Republicans and Democrats could easily find themselves preferring the other party’s candidate. Now, though, conservative Democrats are gone, the Rockefeller Republicans are gone, and the nation is polarized. Democrats aren’t going to win Texas and Republicans aren’t going to win California. So a nearly 100 EV win I don’t call particularly close on the modern scale. Certainly, in this scenario, we’re not having a late night wondering who won.
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Economics projects a 94 EV defeat for Barack Obama
As Aaron Goldstein and I have each noted, today’s jobs report must be a short-term boost to President Obama. Over at intrade.com, Obama’s betting odds to win re-election in 2012 are up from 55.5 percent yesterday (and 54.5 percent the day before) to 56.8 percent, having traded above 57 percent this morning. But it’s economics I want to talk about for a minute, rather than politics. It is all the rage among conservatives, libertarians, and others who, like me, fear and loathe the Obama administration to point out the labor participation rate and suggest that the numbers are being manipulated to the advantage of Barack Obama and that labor statistics are barely-concealed “propaganda.” One of the leaders of this wave — and a guy who I think is generally quite a good analyst — is Tyler Durden who writes over at ZeroHedge.com. A perfect example is here .
Even if Ross Kaminsky is correct in saying that unemployment is falling despite President Obama’s economic policies there is no question these numbers will help Obama’s re-election prospects. The unemployment rate has fallen five straight months
The January employment report, released this morning, must have big grins on the faces of President Barack Obama and his campaign staff. And despite the negative political implications (of helping Obama’s reelection chances), I still can’t find myself rooting against good economic news. The key is that this is happening despite, not because of, Obama’s policies. The month-over-month gain in non-farm payrolls came in at 243,000, far exceeding the highest estimate in Bloomberg’s survey of economists, which was 189,000. Private sector payrolls came in at 257,000, again far above estimates, and showing the additional good news that government head counts are shrinking. The unemployment rate was reported at 8.3%, matching the lowest of the estimates. Average workweek length and average hourly earnings were also very strong. The political issue here, if this sort of economic trend were to continue, is how Mitt Romney will make his case, which is primarily an economic one, if the economy seems to be on a solid recovery track. I do not believe this pace of improvement is sustainable. Nevertheless, the argument that “this is the weakest recovery in modern American history” is somewhat too subtle for the average voter to understand. The stock market is looking much stronger prior to Friday’s open, though one has to wonder whether some of this good news was already “baked in,” given the rally the market had earlier in the week. I would not be surprised to see modest profit-taking by the end of the day. That said, I think plenty of people will be caught short here and if the market is still near its highs in the last 15 minutes, I think they’ll take it higher as the shorts are forced to cover going into the weekend. Government bond and note years are up modestly, and markets have raised their bets on a Fed rate hike by the end of 2013 by about 25%, to a 100% chance of the Fed moving from a 0% target to a 0.25% target. If anything, I think this may still represent lower interest rates than we’ll see if the economy gains traction. There are no two ways about it, at least from an economic point of view: This was a great number, the best in years, and I’m very glad more Americans are finding work. I just hope they don’t credit President Obama.
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Employment Report Blows Away Estimates
Not so long ago, the Great Satan to the labor movement was Wisconsin Governor Scott Walker — who faces a union-led recall election later this year. This week, if perhaps temporarily, that title is being claimed by Indiana Governor Mitch Daniels whose signature Wednesday made Indiana the only right-to-work state in the upper Midwest and one of only two such states in the entire northeast quarter of the nation. (See right-to-work state map here .) Labor unions would like you to think that right-to-work laws outlaw unions. But what they actually do is say that a person can’t be compelled to be a union member or pay union dues in order to hold a job. In other words, right-to-work laws increase the economic liberty of all Americans while threatening the funding sources for union bosses in states where workers are held captive to big labor. This of course threatens Democrats whose life blood is that same union money. Indiana is the 23rd right-to-work state and the first state to adopt a right-to-work law since Oklahoma, which took that step in September, 2001. The industrial, labor-dominated states of the Midwest’s “Rust Belt” such as Illinois, Michigan, and Ohio have for years been losing jobs (and population) to the South, where there are legal protections of workers’ and employers’ freedom. Indiana is aiming to become a Midwest alternative to those southern states. Republican Indiana Senate President Pro Tempore David Long, quoted in the Indianapolis Star , described an Indiana company which was going to move to Alabama but is now staying put, as well as saying that “a company from Michigan was planning to go to a ‘right to work’ state in the South. When they saw what was happening here, (they) invited the state to bid. . . . We are now in consideration for those jobs.” If Indiana can show that its new law is a magnet for jobs, it may turn out to be the first domino to fall across a part of the nation which has been rapidly losing manufacturing jobs while Democrats’ desire to protect union coffers has trumped their desire to promote their citizens’ prosperity. Although less discussed than Indiana’s move, Virginia also struck a blow for public finance rationality and to protect that state’s right-to-work law. With the state’s lieutenant governor casting a tie-breaking vote in the state senate, the legislature passed a bill that
