In a campaign full of many twists and turns, it’s clear to me precisely when Mitt Romney lost the election: Friday, Oct. 6, 2012.
It may seem counterintuitive, because it was just three days after Obama’s disastrous debate performance in Denver. It was a time when the polls and prediction models were all showing substantial movement toward Romney. And a look back at the graphs will show that Obama began to stabilize and pull away much later in the month.
So what happened on Oct. 6?
At 8:30 a.m., the Bureau of Labor Statistics released what was likely the single most consequential economic data point in recent political history: the September employment report. BLS reported that the companies added 114,000 payroll jobs in the month. The unemployment rate, calculated from a separate survey in which BLS asks individuals about their employment situation, ticked down from 8.1 percent in August to 7.8 percent in September.
The report was important: psychologically, economically, and politically. Most savvy pundits thought Ohio would be President Obama’s firewall. But it was really the uemployment data that turned out to be his impregnable fortress.
It was the first time the unemployment rate had fallen below 8 percent since January 2009. But flows are more important than levels, and more easily understood. Or to put it another way, it’s not so much where things are that matter, but the direction they’re going. Since hitting its lows in 2009, the economy had been fitfully—and then steadily—improving. Between March 2009 and the fall of 2012, the stock markets had essentially doubled. In October, the economy was in its 39th straight month of growth. Even the housing market was coming around. And incumbents tend to get rewarded for improvement.
The labor market, however, remained a big question mark. The economy continued to shed jobs into early 2010. And in many months, job growth was painfully slow. That was electoral poison for Barack Obama.
I’d argue that jobs trump almost every figure. They make the difference between people staying current on debt and mortgages. Jobs heavily influence the housing market, and the consumer economy, which accounts for 70 percent of economic activity. And by mid-2012, as the global economy slowed down, affecting the industrial and business sectors, it was vital for consumers to start carrying the load. In a country with a shallow safety net, jobs often mean the difference between having health insurance and fending for yourself, between solvency and bankruptcy. Simply put, the economy needed the September jobs figure to be positive.
It’s not so much where things are that matter, but the direction they’re going.
So did the Obama campaign. In 2009, the Republican went all in against the stimulus, the financial bailouts, and the auto bailouts. Essentially, they were betting that the economy either couldn’t or wouldn’t recover in time for the 2012 election. And it seemed like a smart bet. As things stood in early 2012, it looked as if Obama would be one of the few presidents in history to complete a term with fewer payroll jobs than when he began.
But it put the party of prosperity in a strange situation. In part due to the stimulus and bailouts, in part due to monetary policy, and in large part due to the resilience and adaptability of the private sector, the U.S. economic engine churned through stormy seas. But the Republicans in Congress, and then the Republicans running for president, put themselves on the wrong side of the macroeconomic recovery, and on the recovery of General Motors and Chrysler.
This was supposed to be a battle fought on Romney’s home turf of job creation, the private sector, and economic growth. Every month in which the unemployment rate rose and payroll jobs fell was another point in the challenger’s favor.
Given this framing, every piece of positive economic data was problematic for Romney. And trouble lurked in the trend lines. The jobs picture was slowly, steadily improving. From February 2010 through August 2012, the economy had added about 4.2 million jobs. A few more good reports, and the economy would claw back all the positions lost since early 2009—and start to recoup the jobs lost in 2008. As the headline payroll numbers came in positive, he was left pointing to the unemployment rate, or noting other components of the report that were less rosy. And it left Romney arguing that the news that more than 100,000 people want back to work, and regained the income and dignity that comes with a job, was somehow irrelevant.
As summer turned to fall, however, the improvement in the consumer and labor economy was increasingly obvious. More people working means more jobs and higher consumer confidence, which translates into higher spending, which translates into more demand for goods and services, which leads to more jobs. On Monday, Oct. 1, U.S. automakers reported blowout car sales for September, up 13 percent from the year before and the best monthly total since February 2008. The University of Michigan index of consumer sentiment had come in at its best levels since before the recession.
That set the stage for the much-hyped jobs number. The payroll figure was a so-so 114,000. But the sharp decline in the unemployment rate set off Romney allies and Obama-haters like Jack Welch, the former CEO of General Electric, who suggested that the Obama administration must have fudged the numbers. The over-the-top reaction not only made such snarling surrogates look stupid, but also highlighted the fact that the challenger was essentially running against a recovery.
As the campaign sped toward its conclusion, the economic data was almost uniformly positive: car sales, consumer confidence, retail sales. Indeed, we now know that the September jobs number was even better than originally reported. Last Friday, when BLS reported jobs figures for October, it also revised the data for August and September. August’s figure was revised from a gain of 142,000 to a gain of 192,000, while September’s was lifted from the originally reported gain of 114,000 to 148,000. In other words, there were 84,000 more people on payrolls in September than originally thought.
In the end, the economy helped keep the race close. But I believe the steady, persistent improvement throughout 2012, even if it came a little late, helped President Obama.
From the beginning, this economic recovery and expansion have been politicized in a way that none has since the Great Depression. Because of policy disagreements, the Republican Party found itself on the wrong side of the recovery, and of the auto-led manufacturing recovery in Ohio and Michigan in particular. And so every figure on auto sales, retail sales, and employment became a skirmish in larger war. In the last months of the campaign, the incumbent won virtually every one of those. None was bigger than the battle of the BLS on Oct. 6.