The Employment Situation Report for the month of September was released this morning. It showed what everyone expected: very little change in the unemployment rate. At 4.1%, it was actually slightly lower than that for August (4.2%). One open question was the impact of Hurricane Francine on jobs, but “Our analysis suggests that Hurricane Francine had no discernible effect on national payroll employment, hours, and earnings from the establishment survey, or the national unemployment rate from the household survey.”
The Economy and the Election
As important as these releases are in normal times, they take on extra significance in the lead up to an election. In fact, experts claim that the economy is particularly important to voters this year. It has consequently been a running theme for both parties, with Democrats focusing on low unemployment and robust growth and Republicans on the recent spike in inflation.
What’s curious about this campaign is the fact that the Democrats are having to scramble to defend themselves. You’d think that theirs was the high ground given that:
- unemployment, while trending up, is still extremely low…so low that we haven’t seen a run of numbers like this since the end of the 1990s expansion (and you’d have to go all the way back to the 1960s to find the one before that).
- GDP growth, too, has been very strong, with government programs like the Inflation Reduction Act being important contributors.
Meanwhile, though it is true that inflation accelerated temporarily, there is little question that this was related to factors outside of the US and has calmed down considerably.
Public Perceptions
Despite this, however, voters have a very dim—and flawed—view of the state of the economy:
“Nearly everything Americans believe about the economy is wrong, according to a recent Harris-Guardian poll…The poll, conducted earlier this month, found that perceptions of the U.S. economy are often at odds with reality. For instance, most Americans (55 percent) think the economy is shrinking, with about the same share saying we’re in a recession.”
Unfortunately for the Democrats, perceptions are more important than reality in situations like this.
Remaining Economic Announcements
There are three more key indicator announcements before the November 5th election:
- Oct 10: CPI (Consumer Price Index)
- Oct 30: Gross Domestic Product, 3rd quarter 2024
- Nov 1: Employment Situation Report
If any of these is out of line with what we have been experiencing of late, it could have an impact on voters.
That said, economists do not expect any significant deviation from our current low unemployment, solid GDP growth, and moderating inflation. Even if the dockworkers’ strike (now resolved) and recent flooding were to raise prices, the October 10 CPI announcement only covers September. It simply wouldn’t show up yet.
What this suggests is that the releases will include very little new information and both parties will simply recycle their earlier talking points. If the outcome is going to be affected by the state of the economy, it is going to be because one party did a better job of spinning than the other. And while there is evidence that Kamala Harris’ economic message may be gaining ground on Donald Trump’s, a lot can happen in a month.
Everyone will be watching these numbers closely.