Obama's Re-election and the Unemployment Rate

It is no secret that economic growth is one of the variables that best predicts the results of some elections. However, in the case of Barack Obama’s reelection, analysts agree that the unemployment rate, rather than GDP growth, is the key indicator.

Technically, the U.S. left recession in the third quarter of 2009. Nevertheless, since then, GDP growth has been irregular and it was not strong enough to significantly reduce unemployment. For this reason, the majority of the population still does not feel that it has reached recovery.

When the legislative [elections] were held last November, the country had a year to grow economically, but the unemployment rate stubbornly stayed at around 10 percent. This allowed Republicans to criticize their opponents during the campaign with the argument that Obama’s policies were responsible for the economic mess.

The strategy worked to perfection, and the conservatives gave the biggest electoral beating in recent decades. However, data from recent months seem to show that in 2010, the unemployment rate could become the greatest ally of the Democratic Party and especially Obama.

The U.S. economy created 216,000 jobs in March, the fourth consecutive month with a surplus of jobs, leaving the unemployment rate at 8.8 percent. The figure was better than what analysts hoped for, pointing to a possible recovery of businesses’ confidence, as well as their appetite for reinvesting in new staff.

It certainly seems very difficult for the economy to recover the 8.5 million jobs lost during the recession before November 2012, once again putting the unemployment rate at about 5 percent. However, Obama needs to be less ambitious to be able to present himself before the voters with a winning message.

When Obama took office in January 2009, the unemployment rate stood at 7.8 percent, and during the following months, it rose progressively until reaching 10.1 percent, its peak during this recession. If in the next few months the unemployment rate continues falling and stays below 8 percent, Obama will be able to argue in his electoral campaign that his economic policy is finally taking off. With the ship in the right direction, let’s say, now is the worst time to change the captain.

Also, the recent evolution of unemployment can also benefit the White House in deterring some of its most dangerous opponents, like Chris Christie, from running for office. For now, all the presumed presidential candidates find themselves suspending their options and an improvement in economic prospects could ultimately convince them to wait until 2016 to launch their assault on the White House.

The current situation presents a storm cloud for President Obama: Oil prices have reached their highest level in the last 30 months because of the instability in the Middle East. If the price shoots up, the recovery of the U.S. economy could end, just like last year’s European debt crisis, jeopardizing his chances of being reelected.