Its generally assumed that if in October 2012, the unemployment rate is above 9%, Obama is toast. But if it is under 8%, he will very likely win. If its anywhere between 8% and 9%, the election will be in doubt.
Well, lets try to figure out where the unemployment rate will be based on past recoveries.
Ill use the recovery after the 2001 recession as a templete. That recovery took until summer 2003 until we saw sustained and decent job growth. We saw 5.25% GDP growth in the second half of 2003 and around 3% growth for all of 2004. If this recovery follows that pattern, the unemployment rate would be 8.5% in October 2012. I expect GDP growth to be around 3% for the second half of 2011, rather than 5.25%, so I think the unemployment rate will be more like 8.7% or 8.8% in October 2012.
What if this recovery follows the pattern of the 1990-1991 recession? In this case, we saw very weak jobs growth until 1993. GDP growth was around 1.7% in the second half of 1991 and 4.2% for all of 1992. If that's the case, unemployment will be 9.5% in October 2012. I expect a better second half of 2011 than 1.7%, so unemployment should not be this high by October 2012.
Keep in mind that you need around 150,000 jobs a month just to keep the unemployment rate steady, since about that many people per month enter the labor force. Im expecting about 175,000 jobs to be created per month for the next 16 months and an unemployment rate of 8.8% in October 2012.