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How significant gains in the job market resulting from second round stimulus spending and pent up unprecedented productivity gains could tilt the November elections to the blue side.

"Various indicators such as the low level of employment relative to production and sales, the extraordinarily high level of productivity growth, the very high levels of free cash flow relative to sales, the low levels of inventory relative to sales, the strong recovery of the corporate bond market, and various other indicators strongly suggest that the US economy could experience a case of “Okun’s Revenge” in 2010 in which employment growth in the next few quarters rebounds much faster than the rate of GDP growth would normally imply." - Emerging markets and banking analyst, James Kostohryz

Many pundits and news organizations have theorized that the bad economy now belongs to the President and the Democratic party. Meanwhile, a Gallup poll released recently says 49% of Americans still blame George Bush for the recession.

While most people tend to have political amnesia, in this case it's obvious most Americans aren't forgetting that the economy teetered at its worst point after Lehman Brothers collapsed, during George Bush's lame duck days as President.

While it has been said by many that the Obama stimulus bill was weak because it spread out the stimulus over two years, it is starting to become quite apparent that economist predictions about its most significant effects being felt in 2010 were correct, and it might end up being better for the jobs market than having had a big punch in 2009 could have.

While the delay in some spending was bad news for most Americans that have already been hurting for months and even years, there's a lot of good in having had the recovery take shape in the way that it has.

It is only the 4th month in the year and the jobs market has started to gain traction all on its own addding 162,000 jobs in March. One third of the jobs added to the economy were census jobs, yes, but the two thirds that were added were real jobs added by the private sector.

Clearly, the trend here has finally turned a corner. It's not as if government jobs weren't aiding the labor recovery until the census began. They've been helping the recovery the whole time.

There is an expectation that most of the stimulus cash is gone already, but the reality is that a lot of money that was set for 'shovel ready' projects was actually intended for projects that weren't exactly as shovel ready as initially advertised. Many of those projects don't even break ground until later this year.

Just think, there's still about 40% of the almost eight hundred billion in the stimulus bill left. If we went from losing 750,000 jobs a month to gaining 162,000 in the first installment of the stimulus bill, there is a great possibility that the amount of jobs created by the bill will crescendo during its second big installment.

It of course is possible that the economy could lose jobs again in April like it did after the one month of job growth late last year, but the trends don't support this idea. Progressively lower numbers of long term unemployed and new unemployment requests mean people are finding jobs, and there has been no significant disruption in this trend.

We do know that census jobs will increase and so will government funded road construction jobs. New housing construction mostly happens during the summer just like road construction, so even with a retarded housing market, jobs will come back for every day laborers as the normal working season resumes.

Retailers are needing to restock shelves that have had inventories at their lowest levels in quite some time with a significant uptick in consumer spending, particularly among the all important teenage group, rising around 8-10% over last year.

With a job market already gaining momentum, the situation right now seems to point to a pretty strong jobs rebound during at least the summer months of 2010.

Who provides a really convincing and frankly well researched but complicated analysis of why it's very possible that a strong job recovery can take place this year is emerging markets and banking analyst, James Kostohryz.

He says,

"Various indicators such as the low level of employment relative to production and sales, the extraordinarily high level of productivity growth, the very high levels of free cash flow relative to sales, the low levels of inventory relative to sales, the strong recovery of the corporate bond market, and various other indicators strongly suggest that the US economy could experience a case of “Okun’s Revenge” in 2010 in which employment growth in the next few quarters rebounds much faster than the rate of GDP growth would normally imply."
To read the complete piece (and believe me, you should), check him out at  The Free Republic (weird choice of publication, for this piece, I know)

All of this sets up for a mid-term election that may provide much more mixed results than anyone might expect.

Without any doubt, a strong jobs recovery will improve Obama and Democrat's approval ratings and improve their chances in the November elections. Even a moderate jobs recovery for the next few months could really abort the polling nosedive they seem to find themselves in right now.

A recovery is definitely taking hold and if significant could really end up putting Republican's in an awkward spot with plans on running solely on repealing Health Care reform.

I admit, I was wrong in a previous ideas piece I had written. If the unemployment problem remained strong, then Obama and Democrats would be in trouble, but the economy is on an uptick at precisely the right time and right when it's needed.

The more the economy shows strength, the more Democrats will be able to run on it. If it remains weak, then the relationship will likely not be made by voters and the expectations of a blue bloodbath in November may end up being satisfied.

Originally posted to The Art of Politik on Fri Apr 09, 2010 at 02:46 PM PDT.

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Comment Preferences

  •  Tip Jar (4+ / 0-)
    Recommended by:
    fou, stanjz, Jampacked, icemilkcoffee

    "Our sins don't define the whole picture of who we are" Edward M Kennedy

    by r2wildfire on Fri Apr 09, 2010 at 02:46:27 PM PDT

  •  Need a couple more months of data before... (1+ / 0-)
    Recommended by:

    anyone can say what the trend might be.  I am concluding basically what you are.  The economy tanked so badly for so long last year it can't help but come back with a vengence and all the preliminary indicators that always happen before employment gains have been extremely strong the past 6 months.

    •  Employment WILL RISE This Summer (0+ / 0-)

      It always does in the summer.

      And the Unemployment figures will fall as beneifts run out for millions, and the are "removed" from the counting by BLS.

      But the base problems that most Americans outside of the FedGov and DC will still remain.

      We're 6 months to a year too late for it to help in the fall midterms.

    •  Talk to your neighbors (1+ / 0-)
      Recommended by:
      Brooke In Seattle

      They are not spending.  

      They will not spend again for a long, long time.

      We are in a JOBLESS recovery.  The last couple of downturns have been JOBLESS.  While there are myriad reasons for this, the fact remains, we don't need that many people working in the economy we currently have.  

      Consumers are not going back to their spending habits from 2005 - 2008.  Ever.  Consumer use of credit is way down.  And since no one has wages to buy the shit they did when credit was easy, buying will remain slow.

      So, in a consumer-based economy, where do we go?  We've already tried "financial services" as the basis of our economy and that just about broke us.

      Unless green and alternate energy makes a huge private sector surge, there ain't shit on the horizon, most especially between now and November.

      •  Nonsense (0+ / 0-)

        I work in retail, analyzing weekly buying trends across a number of departments and a number of retailers and there is real growth year to year and month to month in sales numbers. Almost all manufacturers I advise are now getting pushed to ship more than expected later this year.

        And anecdotally my own company, based in retail, has recently started hiring again as well as restoring garnished wages from 2009.

      •  Actually, my neighbors have begun to spend (0+ / 0-)

        so in my own experience I do see a recovery going on.

        I know a few people who have purchased a car or bought new appliances. People are generally more optimistic about the economy and I personally have seen more job opportunities arise and have received more callbacks for an interview than at any point in the last six months.

        Consumer credit won't be a driving force behind the growth, but two things, the corporate credit markets have thawed to pre-recession levels and job productivity is up an unprecedented 6.9% and is trending sharply up-a trend that is attributed to quality of life increases.

        You're forgetting that not everyone was unemployed during this recession. As bad as it's gotten, there are still a lot of people working and many of whom do have income that they're choosing not to spend and are saving because of the economic conditions.

        The way you get out of a recession is by getting those people to spend their money again, and this is something Obama will have to sell in the coming months now that there is real good economic data to tout.

        The economy got to such a bad bottom that the prevalent 'new normal' term didn't end up fitting, in the end it was a bottom that exceeded its actual decline. This is obvious because of the pent up productivity and how it's at historically high levels.

        The fundamentals are turning out to be much stronger than expected, this is why I believe there is a recent big wave of optimism coming from many big economic think tanks.

        "Our sins don't define the whole picture of who we are" Edward M Kennedy

        by r2wildfire on Fri Apr 09, 2010 at 11:37:08 PM PDT

        [ Parent ]

      •  Why this isn't a jobless recovery (0+ / 0-)

        "Our sins don't define the whole picture of who we are" Edward M Kennedy

        by r2wildfire on Fri Apr 09, 2010 at 11:58:55 PM PDT

        [ Parent ]

    •  While they still blame Bush, they also blame the (0+ / 0-)

      Dems more the R's. Not good!

      Bush is not running the country. He's gone!!! Not so the Republicans who helped him drive the economy into the ground.

      We have to concentrate on them. They are the ones who are running for office NOT BUSH!

      We have to concentrate the public's mind on what the R's did to this country.

      How come they can attack us, but we always seem to be on the defensive. Never pointing out their failures.

      Progressives will win when the country becomes Progressive.

      by auapplemac on Fri Apr 09, 2010 at 04:41:11 PM PDT

      [ Parent ]

  •  I've Seen Articles Like This Since May 2009 (2+ / 0-)
    Recommended by:
    Nulwee, TimmyB

    I'm still waiting for last years's "600,000 Summer Youth Jobs!!"....

    •  Link to any such May 2009 articles. (2+ / 0-)
      Recommended by:
      Jampacked, r2wildfire

      Anybody who was predicting imminent job recovery while economy was shedding half a million jobs a month shouldn't be allowed to write. period.

      •  Seconded (0+ / 0-)

        All I saw, even best case scenarios, was return to job growth in Q1 of 2010 and aggressive recovery (to 8.5% U3) by end of the year (which is as positive a spin as I would ever put on this economy). Far more often I saw talk of low 9% range, or stagnating unemployment rate all the way into 2011.

    •  About those 162,000 jobs: (3+ / 0-)

      Here's another breakdown of that jobs report:

      Let’s have a look at these 162,000 jobs.

      Right off the bat, we know that 48,000 of them came from hiring census workers. I won’t completely put this down because these ARE new jobs. But they’re hardly sustainable (the census is a temporary employer) or productive: paying someone to count other people adds literally NOTHING to the US’s manufacturing or productivity base. If it did, we could simply start hiring people to count clouds or trees and have an incredible economy in no time.

      So without census workers, we added 114,000 jobs in March.

      Then there are the +81,000 via birth/death adjustments. This metric is so complicated that it’s not even worth trying to explain. In simple terms, the BLS tries to adjust the jobs numbers to account for the birth/death cycle of businesses. But the reality is that it is an "X" factor used to downplay job losses and boost job gains.

      Without these adjustments, we added 33,000 jobs in March.

      Then, of course, there are the weather adjustments. The winter of 2009-2010, was by all counts, a rough one. So the BLS made various adjustments to atone for the fact that for several chunks of 1Q10, people couldn’t even get to work, let alone hire.  Now that the winter is over, the BLS is adjusting numbers upwards to make up for former downward revisions. The total number of jobs "created" by adjusting for the nasty winter? 100,000.

      Without these adjustments, we LOST 67,000 jobs in March.

      That's more in line with the ADP report.

      "Capitalism is irresponsibility organized into a system." -- Emil Brunner

      by goinsouth on Fri Apr 09, 2010 at 03:37:26 PM PDT

      [ Parent ]

      •  Geezus (3+ / 0-)

        if there going to adjust the numbers to that degree, it pretty much defeats the purpose of even releasing a monthly number. The proof seems to be in that initial jobless claims actually went up this week and the four week moving average is also up.

        •  You're Beginning To "Get It"/U-16 ROSE To 19.9% (0+ / 0-)

          Which is why U-6 is the better indicator of unemployment.

          There are numbers, and then there are damn numbers...

            •  Actually, u can both be correct. A recovery's beg (2+ / 0-)
              Recommended by:
              r2wildfire, ahumbleopinion

              inning is a transition period.  Jobs are not exempt. So it is entirely possible to be creating jobs of say, 2-4 million b/t now and Nov. and still have U3 over 9%, especially given pop growth and return of discouraged (and U-6 is an estimate too after all).

              What matters is do things look like they are getting better.  

              If Ds can run ads saying something like: "Under the Rethugs/Bush, 7 million jobs were lost in 2008.  The economy was falling off a cliff.  D's stopped the crash.  And now we're adding jobs again. 1/2/3/4 million jobs in just the last 6/9 months.  Why would we go back to losing 9 million jobs?  Vote to keep going forward!  Vote D/candidate.", then there won't be 30 lost H seats.

              Might not even be 20. Or 15.

  •  ...and, I will win lotto tomorrow... (snark) n/t (7+ / 0-)

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Fri Apr 09, 2010 at 02:58:43 PM PDT

  •  Talk doesn't cook the rice--Chinese proverb. (7+ / 0-)

    Let's go into the field shall we, and speak to the tens of millions of unemployed and underemployed to get THEIR opinion.  Also, let's speak to the over 200,000 who, because Democrats (in the majority) could not surmount a GOP challenge (e.g., Coburn) this week lost their unemployment benefits and will be facing who knows what next week---homelessness?

    Quantum mechanics gives us the notion of 'likely location' of particles.  We should not apply quantum mechanics to human beings who are tired of hearing that the 'recovery is likely,' or that full employment in 2010 is 'likely.'

    I personally, have grown over the years to HATE these theoretical, academic expressions that have no basis in REALITY.  Which is why this diary truly angers me for its patronizing, theoretical commentary that implies that the actual lives of unemployed Americans don't truly matter.  

    •  Anecdotes don't tell the whole story (0+ / 0-)

      They just tell the immediate story of that particular person at the time.

      Anecdotes don't rely on economic data or anything like that, they are experiences. I don't know what you're trying to do by berating an opinion piece about a general state of the economy by going on about the topic in micro terms when what I was speaking about was at the macro level.

      If you think that the figures aren't based on reality, then I feel sorry for your inability to use reason to foresee things with an accurate lens rather than rely on an emotional pessimistic response to the things around you. If anyone I am patronizing, it is people like you, unable to see further than your immediate surroundings. The whole world isn't going through the same thing you are going through.

      "Our sins don't define the whole picture of who we are" Edward M Kennedy

      by r2wildfire on Fri Apr 09, 2010 at 11:47:01 PM PDT

      [ Parent ]

  •  Imagining November with good employment means you (1+ / 0-)
    Recommended by:
    dance you monster

    have to imagine a November election decided on other issues since it wouldn't be about unemployment.

    You have to use your imagination to imagine what that might be. You didn't use your imagination to imagine other issues without unemployment as the issue.

    So if you're going to imagine the future high employment in a future election you have to imagine what else might be the issues that decide that future election.

    Support good reform not a political party blindly.

    by Eposter on Fri Apr 09, 2010 at 03:25:55 PM PDT

  •  Your enthusiasm is admirable,... (3+ / 0-)
    Recommended by:
    PsychoSavannah, bobswern, cybrestrike

    ...but I'm dismayed that you seem to have so little regard for the predictions of other economists (from the latest Bloomberg survey):

    Unemployment will drop to 9.4 percent by December, and average 9.6 percent for all of 2010 and 8.9 percent in 2011, this month’s survey showed.

    or of those in charge of the economy in this Administration:

    While the financial crisis has abated and economic growth will probably reduce unemployment over the next year, the U.S. faces hurdles including the lack of a sustained rebound in housing, a "troubled" commercial real estate market and "very weak" hiring, Fed Chairman Ben S. Bernanke said this week.

    His remarks reflected similar concerns expressed by other policy makers, including New York Fed President William Dudley, giving economists reason to rein in policy projections.

    A drop of 3/10 of one percent in unemployment over the remainder of this year is hardly a "robust" recovery.

    Just sayin', one economist's prediction is maybe not the strongest foundation on which to predicate election victories in November.

    •  There are a few economists changing their minds (0+ / 0-)

      recently because of last month's economic data.

      Some of those figures are clearly much higher than what had been expected or thought possible last year.

      New York Times
      James Kostohryz

      Economy could conceivably add the necessary ~250,000 jobs a month for a few months to significantly tackle the unemployment rate. Maybe it wont, but the fundamentals are there for it.

      "Our sins don't define the whole picture of who we are" Edward M Kennedy

      by r2wildfire on Fri Apr 09, 2010 at 11:52:38 PM PDT

      [ Parent ]

  •  Whatever the conditions are on Labor Day... (2+ / 0-)
    Recommended by:
    chrismorgan, Jampacked what most voters will project into the booth in November.

    If we are at 9.6% or 9.5% for the end of August, I'd be surprised. If there is some consistent hiring, the number of people looking for work who were previously long term discouraged is going to inflate the official rate.

    "Power concedes nothing without a demand. It never did and it never will." -- Frederick Douglass

    by Egalitare on Fri Apr 09, 2010 at 04:01:50 PM PDT

  •  Bush had the worst job creation on record (2+ / 0-)

    add in the fact that Republicans have no interest in creating jobs or helping the private sector create jobs

    Republicans are in lock step with the U.S. Chamber of Commerce which puts corporate profits ahead of everything, including the welfare of most Americans

  •  Most economic stimulus and other bills (0+ / 0-)

    take a while to fully start working. There is always a lag time of some sort when implementing new economic bills.

  •  Infrastructure projects (1+ / 0-)
    Recommended by:

    Ohio is reported to be starting a record summer of highway projects, up 30% from last year.  Bad for drivers, hopefully good for the economy.

    The only thing necessary for the triumph of evil is for Democrats to stay home in November.

    by ahumbleopinion on Fri Apr 09, 2010 at 06:10:33 PM PDT

    •  This was one of my points and you are right (0+ / 0-)

      This is one of the reasons why there's a high likelihood that jobs growth will be much stronger this summer than previously had been thought.

      "Our sins don't define the whole picture of who we are" Edward M Kennedy

      by r2wildfire on Sat Apr 10, 2010 at 02:08:28 AM PDT

      [ Parent ]

  •  How could we get President Obama to talk (1+ / 0-)
    Recommended by:

    about jobs and more job creation for more than a week?

    We know by now when he gets totally engaged that he could get things done.

    7 months away from mid terms and it's now financial reform, another arms summit, choosing a judge and still the emphasis is not on JOBS.

    Are we getting a little tone deaf?

    •  You make a good point (1+ / 0-)
      Recommended by:

      They've really been lagging on this, especially when they really do have a lot of room to claim responsibility for the improving economic data.

      "Our sins don't define the whole picture of who we are" Edward M Kennedy

      by r2wildfire on Sat Apr 10, 2010 at 01:27:57 AM PDT

      [ Parent ]

  •  There is a lot of evidence that we overreacted (0+ / 0-)

    and had great expectations about the recovery because of how bad it did get, but we really underestimated how much of a boost the economy was getting from administration policies.

    There are many pieces that have come out since recent data came out that have a suddenly very optimistic view of the economy in 2010.

    (See the article I linked to in the piece and these for example who recently have been more pessimistic,

    New York Times

    The jobs added in March has really changed the outlook of many analysts.

    By my watch, every piece since the jobs report came out have been a lot more positive about the economy and the possibility of very good jobs numbers, a perception tied to an incredible increase in job productivity, 6.9% and expected to get higher.

    Companies are engorged in cash and are at the right point to begin hiring a much better than expected levels. When Obama came into office, corporations expected the economy to be growing 2.1% around this time, the economy grew 5.6% the last quarter we have data for.

    There is a lot of evidence pointing to an overreaction. The economy may be able to function significantly well into 2010. The situation in the economy has changed significantly in the past 4 months.

    "Our sins don't define the whole picture of who we are" Edward M Kennedy

    by r2wildfire on Fri Apr 09, 2010 at 11:24:09 PM PDT

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