Yesterday, the US bureau of labor gave a disappointing jobs report. In April, only an additional 115,000 workers were added to nonfarm payrolls, making it the weakest gain in the last six months. Additionally, the unemployment rate declined to 8.1% due to a significant number of people no longer seeking work. In response to the poor report, the major indexes were in the red across the board with the S&P 500 dropping 1.6% for the day. Also in response to the negative report, the yield on the 10-year Treasure note declined from 1.93% to 1.88%, and the price of oil dropped to its lowest level in almost six months.
Obama’s 2012 campaign had been shaping up very well before yesterday with a cornerstone of his campaign being the recovery in the US economy since his election to office in ’08. However, Friday has brought doubt on whether the United States really is in a recovery at all. In response to the report, Roger Altman of Evercore Partners said, We need 200,000 to 250,000 jobs to really make this, or to illustrate that this is a healthy and strongish recovery. We’re nowhere near that.” Expected Republican nominee Mitt Romney has already turned the report into campaign material. In reaction to the report, he said, “This is way, way, way off from what should happen in a normal recovery. We see to be slowing down, not speeding up.” Also in response to the report, the Obama campaign has tried to emphasize the private sector’s feat in adding jobs for each of the past 26 months.
The quick reactions by both parties make it clear that the economy will be the foremost issue in the 2012 election. The more negativity there is surrounding the economy in the next few months, the greater the chances of President Obama losing the election. Psychologically, this should prove a very strong position for President Obama. His reelection appears aligned with the incentives of all Americans to have a stronger economy.