On August 3 the Bureau of Labor Statistics released a job report for the month of July. Although the unemployment rate is now at 8.3%, total nonfarm payroll employment rose by 163,000. Employment rose in professional and business services, food services and drinking places, and manufacturing.
Although the unemployment rate remains stubbornly high, and the current rate of job growth is essentially offset by population growth, the employment data from this month is an undeniable improvement on the last few terrible jobs reports.
The combination of increased job growth and a slowly improving housing market will have political repercussions. The fact that the unemployment rate has remained so high is an obvious concern for President Obama given the strong correlation between high unemployment and incumbent Presidents losing elections.
Although the most likely scenario is that economic frustration will hurt Obama and Democrats as a whole, it is also possible that if the recovery begins to regain momentum, it will be enough to propel President Obama to victory.
Even if the recovery began moving at a quicker pace, that would obviously still mean the unemployment rate would be above 8% in November. 8% is a very high unemployment rate for an incumbent to deal with, but given the fact that polls currently indicate President Obama has a slight advantage in swing states, despite how anemic the recovery has been in recent months, it can be reasonably assumed that the President will have an advantage in November if the economic forecast improves moderately.
In reality a few things will have to happen before any sustainable economic growth can happen. The Eurozone has to stabilize, investors must be confident that the slowing economic growth in China is temporary, and the U.S. legislature must find a way to avoid the automatic tax increases and spending cuts that are activated on Dec. 31, 2012 at midnight. These unresolved issues will continue to keep markets volatile and will prevent any strong and consistent growth from being possible.