The US unemployment rate has jumped to a five-year high of 6.1%. With high energy prices, falling house prices and job insecurity troubling many Americans, the latest data point underlines that the 4 November presidential election is likely to be largely about the economy rather than nebulous “values” or even national security.
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There’s one more monthly employment report expected before the election, on 3 October, and it’s hard to see how it will make anyone think better times are on the way. The one after will come on 7 November, as the world digests the implications of the new president-elect.
Inflation is another factor. The consumer price report for August is due on 16 September, with another monthly report in mid-October. The July consumer price index was 5.6% higher than a year earlier. Easing energy and commodity prices may reduce upward pressure on prices somewhat, but probably not by much. The informal “misery index”—the sum of the unemployment and inflation rates—came in at 11.3 in July. With unemployment in August adding 0.4 points, inflation needs to fall quite a bit to pull the index down from its 18-year high.
Pressing issues: US presidential candidates John McCain. The economy is the main issue in the election. Jae C Hong / AP
Then there’s housing. House price indexes and other data releases between now and 4 November might provide further evidence that the rate of price decline is slowing, but the overall impression is still likely to be grim.
US presidential candidates Barack Obama. Jason Reed / Reuters
The US Federal Reserve, meanwhile, will set overnight interest rates on 16 September and 29 October. Few expect a change from the current 2%. The US central bank won’t want to risk a move that could seem political.
Finally, there’s the broad economy. The surprisingly strong 3.3% annualized growth in second quarter gross domestic product (GDP) in last week’s preliminary report will be either confirmed or contradicted by the “final” report on 26 September. More importantly, the advance estimate of third quarter GDP, which many expect to reflect the significant weakness people seem to be experiencing—even perhaps a recessionary decline—is due on 30 October. It’s the last big release before the election. It could prove a fitting reminder of the continuing relevance of Bill Clinton’s famous 1992 election slogan: “It’s the economy, stupid!”