Our economic situation and the background music accompanying it will dominate this election more than any since the Great Depression. The winning candidate will be the one that offers the most coherent economic policy to a country that is hurting.
With the Florida primary behind us, pundits are now pouring through its exit polls to come up with numbers to tell us where Mitt Romney's strengths and weaknesses lie. Pollsters are doing the same with numbers attached to President Obama's current approval ratings, giving us state-by-state projections of his likely electoral vote count.
Such speculation is an empty exercise, not only because of its inability to determine where public opinion will be in October, but also because it leaves out what may be the most important number of all. I'm talking about a measure of the strength of the economy in the first three quarters of 2012. That will determine what economic background music will be playing during the election, which will influence the outcome.
In good times, the incumbent usually wins; in bad times, the challenger has an edge. So, to handicap the election, you want to know how much the economy will grow between now and November. I don't know the answer to that, but I do know which numbers to follow to see what is likely to happen: GDP growth and the unemployment rate.
GDP numbers measure total spending for goods and services; an increase there says recovery is happening. But recovery is not a guarantee that unemployment will decrease. During the recoveries following the last two recessions before this one, unemployment stayed high for months, giving rise to the phrase "jobless recovery." Republicans attacked Clinton with it in 1994; Democrats returned the favor against Bush in 2002. It is now being hurled at Obama. In fact, the nature of the "jobless recovery" had little to do with government policy and lots to do with technological advances and demographics.
When GDP growth is fueled by higher productivity — systems or inventions that do better work with fewer workers — the unemployment rate remains high even as the economy grows. That happened in the mid '90s and beyond; old factories employing many workers closed down while new, more efficient ones were built; jobs went down while output went up. Unemployment didn't come down until GDP growth was not just positive but truly robust.
Then there is the impact of population growth. The number of new jobs created must not only make up for those lost to productivity but also exceed the number of new workers joining the work force each month. But those new workers will not be hired, even if jobs are there, if they do not have the necessary skills to do them. Today's unemploment rate stays stubbornly high even though there are many excellent jobs going vacant, simply because there are not enough qualified applicants to fill those jobs. Our educational system is not providing enough of the kind of workers our modern economy needs.8 comments on this story
To reach "robust" status in 2012, the economy will have to grow at a faster pace than it did last year. The third quarter GDP growth rate for 2011 was 1.8 percent — anemic — and the fourth quarter was 2.8 percent — below expectations. The unemployment rate did not change much even as new jobs were created. It takes at least two consecutive quarters of GDP growth above 3 percent to bring it down significantly.
Unfortunately for candidates, the economy does not respond to traditional political rhetoric, as the Europeans are learning. Unemployment is painful and short-term speeches cannot overcome long-term trends. Our economic situation and the background music accompanying it will dominate this election more than any since the Great Depression. The winning candidate will be the one that offers the most coherent economic policy to a country that is hurting.
Robert Bennett, former U.S. Senator from Utah, is a part-time teacher, researcher and lecturer at the University of Utah's Hinckley Institute of Politics.