In case you hadn’t noticed, 2012 is an American Presidential election year and if you don’t know what the central issue is, former president Bill Clinton’s famous line still provides the answer: “It’s the economy, stupid”. In point of fact, it always has been; is; and will be. For that reason, economic indices are being closely scrutinised and, another political truism, will be spun to the advantage of either side.
On Friday, unemployment statistics were released which show that there had been a surprise and significant drop in the percentage of Americans out of work from 8.1% to 7.8%. An additional 114000 new jobs were created in September.
Back to the Way Things Were?
US unemployment is now at the level it was when President Obama took over from President Bush in 2009 when the global financial crisis was raging. The figure is politically sensitive since Republicans can’t say unemployment is worse under the current administration and the Democrats can, at least, claim that they have turned a corner and the economy is finally picking up.
Romney and Obama have put their spins on the numbers with the president opining: "Today, I believe that as a nation we are moving forward again." His opponent countered that a level of 7.8% unemployed "is not what a real recovery looks like".
Whilst economists and analysts all regard the data as a step in the right direction, their opinions on the broader significance of the figures against a backdrop of sluggish and slowing global demand are also mixed.
A breakdown of the data shows that 44,000 new jobs were created in the healthcare sector and a further 10,000 in government positions – no doubt both of these statistics will be ceased upon by Republicans who accuse their opponents as being the party of “big government” and attack its healthcare plans as being unaffordable. A further 5000 jobs was added to the politically neutral (well…) construction sector.
As the week unfolds, market reaction to the US jobs data should push global stock indices higher on bullish sentiment that the US economy is moving forward.