It’s now official. If President Obama wins reelection, he’ll set a record. He’ll be the first incumbent president since Franklin Roosevelt to win a second term when unemployment stood above 7.4%.
If he loses, he’ll join Jimmy Carter, George H. W. Bush and Gerald Ford as incumbents who lost when joblessness was above 7.0%.
The unemployment rate—which ticked up 0.1% to 7.9%, slightly reversing a sharp decline the previous month--is hardly a foolproof barometer of economic progress or electoral success.
Investors and economists often focus on the number and types of jobs that are created or lost. And other measures—changes in personal income or national output—may be better indicators of how the economy is doing and how the country feels about it.
But to the extent that voters zero in on a statistic, the unemployment rate remains the most closely watched economic measure. After the worst downturn since the Great Depression, unemployment has remained stubbornly high throughout Obama’s presidency (it was 7.8% at the time he took office and peaked at 10% exactly three years ago).
Still, today’s jobless level isn’t far out of line with other recent elections in which a sitting president was on the ballot. In four out of six (1976, 1980, 1984, 1992), unemployment was between 7.3% percent and 7.7%. (See the chart below for all post-World War II elections featuring incumbent presidents)
The bad news for Obama: All but one of those incumbents was defeated.
The lone exception was Ronald Reagan, who won reelection in a landslide, even though the jobless rate stood at 7.4%. Eight years later, his heir, George H. W. Bush, was unseated, with the rate at an almost identical 7.3%.
The difference? Economic trends often outweigh absolute numbers.
In Bush’s case, joblessness had gotten worse in the year leading up to the election, with unemployment three-tenths of a percentage point higher on election day than it had been 12 months earlier. (In fact, it had come down from a peak in the middle of the election year, but many voters were unconvinced that the economy was recovering.)
Similarly, in 1980, when Carter became a one-term president, unemployment had worsened by a full point and a half in the year leading up to the election, winding up at 7.5%.
By contrast, in 1984, the rate had come down by 1.4 percentage points over the 12 months before Reagan’s victory.
But trends don’t always tell the whole story, either.
Unemployment had improved by seven-tenths of a point in 1976, and Ford still lost. Non-economic factors – primarily the country’s desire to wipe the slate clean in the first presidential election after the Watergate scandal—helped Carter, who ran as the candidate of change, defeating Nixon’s handpicked successor.
This year, the economy is far and away the most important issue for voters, though Obama spent hundreds of millions on negative ads in an attempt to change the subject (attempting to disqualify Mitt Romney by attacking his character, business dealings and plans to give the wealthiest Americans another tax cut). At the same time, the president has defended his own record, highlighting the millions of jobs that were created during his term.
Romney has worked hard to remind voters of the millions Americans who still are either looking for work, have been forced to take part-time jobs or have given up altogether. Another four years under Obama, he contends, would only mean more economic misery.
With Friday’s report, the jobless rate has improved by a full percentage point over the previous 12 months. Tuesday’s election will show whether that’s good enough to convince voters that the economy is back on track.