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April 21, 2011

Danger Close: Obama's Quarterly Approval Rating Suggest He Needs Help, Fast, Or He's In Trouble

At Hot Air. I'll force you to click there for the actual number (which is not really very bad, and definitely not as bad as I think it should be) because I'm stealing Ed's context:

Two of his predecessors had lower [ninth quarter of their respective presidencies] approval ratings and went on to win second terms. However, both Ronald Reagan and Bill Clinton showed significant improvement in Q10, Reagan by almost six points (38.8% to 44.4%) and Clinton by almost five (45.7% to 49.3%).

In both cases, the the men had the advantage of strongly growing GDP's already baked in the cake.

As they always say, unemployment is a lagging indicator. It tells you were you were not where you're headed. Employment is typically one of the last indicators of a positive economy to perk up. Businesses avoid making employment decisions for as long as possible, waiting for the overall trend to not only be confirmed but confirmed doubly and then again. They downsize their workforce in the later stages of a recession; and they add workers in the later stages of a recovery.

GDP growth is a leading indicator. The GDP usually tells you which way the labor market is headed... in six months' time.

Point being, Clinton and Reagan both knew, at this point in their presidencies, that help was on the way. They had already recorded positive recovery bursts in GDP -- in fact, Clinton never even had to wait on such a thing, as the GDP was already growing (and in fact had been growing for the last six months of George Bush the Elder's term) when he assumed office.

The news -- which I remember well -- from the time of Clinton's inauguration was always "Sure, the GDP numbers claim the economy's growing, but is it really growing? We sure don't feel it out here in the real America."

And, in fact, they didn't feel it. Not for a year and a half, maybe more. But those GDP figures were in fact as real as steel, and they meant that within a short period of time that employment and wage increases would follow, as sure as a cart follows a horse.

Reagan only posted a 2.60% quarterly growth rate in his ninth quarter. (Chart here, 1st quarter of 1983 if I'm counting right. Not so good; 2.60% is barely keeping pace with the rate of expansion of population and won't add new jobs. It'll only keep jobs from being freshly lost.

But the next quarter-- his tenth -- he posted a 10.9% quarterly GDP growth rate. And that will add new jobs. Oh, it won't be repeated -- that burst of explosive growth is just a one-off thing in recovery-- but succeeding quarters will be at 5%+ and then drop to a nice 3.5% average. A sustained rate of growth that will create new jobs.

In Reagan's case, it was repeated, almost, for a year: In successive quarters the economy grew like gangbusters at 6.5%, 7%, 7.4%, and 5%. Now that is a recovery.

So, point is, at this point in Clinton's term the help of a hiring boom was already on its way and in fact was late -- took a while for people to start hiring. But on the way it was.

At this point in Reagan's term the economy had shifted from negative to slightly positive at 2.60%, but the next quarter was a jolt that woke everyone out of their Carter-years torpor.

So help was definitely on the way there.

But Obama?

I think he had one quarter of 4.1% growth (or thereabouts) which isn't really the sort of robust burst of activity you associate with a typical recovery. And since then it's been an anemic recession-in-all-but-technical-definition rate of 1.5% to under 3%.

So is there help on the way for Obama? Unless his policies have set the stage for a Reagan-like explosion in entrepreneurship and risk-taking and investment timed to detonate in the next quarter or two, then it doesn't look that way.

Going into the election (and the Conventional Wisdom is that people make their decisions on the strength of the economy six months before an election -- a habit that hurt George Bush the elder), it looks like Obama will have a bad economy that is mostly flat in its badness -- bad, not getting worse, but still bad, with no powerful signal for coming expansion.

And hence, the jobs won't be coming. I don't think they're coming at all, but even if they do -- if they come very late, it won't help Obama as much as it would if they came a year out from November 2012.

I hate that situation -- I hate that so many Americans are out of work -- but hate that as it may I do have to at least take pleasure in the fact that this is all very bad for Mr. My Way.

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posted by Ace at 02:33 PM

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