Free Markets, Free People
Jobless Rate Key To 2010 Results?
Neil King thinks the unemployment rate will be on of the keys to outcomes in 2010.
“Unemployment is the leading economic indicator when it comes to politics,” said Democratic pollster Peter Hart. “Anytime unemployment hits double digits, it’s hard to see the party in control having a good election year.”
Economists generally predict that the number of people out of work will continue to inch up next year, even if the economy begins to rebound. Most see the jobless rate peaking at around 10.5% in the summer. Former Fed Chairman Alan Greenspan said Sunday that his own hunch was that the economy would turn around over coming months, but that unemployment would “penetrate the 10% barrier and stay there for a while before we start down.”
As Dale has noted, if we were calculating unemployment as we did in 1974, we’d be in the 17% area. That means a lot of voters are hurting and the one place they can voice their displeasure is at the ballot box. Additionally, by 2010 the “we inherited this” gig will have been up for some time. Democrats in Congress have been in charge for almost 4 years now. Politically that means this is their economy. The last time unemployment was over 10% during a midterm, the Republicans lost 26 seats in the House.
Then there’s the stimulus which was touted to be the answer to unemployment. The current administration promised that passing it would keep unemployment down in the area of 8%. But after its passage it didn’t even slow the growth of unemployment, a fact Republicans are sure to point out in the coming year.
As it turns out, Democrats may be happy to just lose 26 seats. Republicans are targeting 54 vulnerable Democrats, 49 of which come from districts John McCain carried in 2008.
Add in Afghanistan, health care, cap-and-trade and the huge expansion of government and the fact that Congress is deeply unpopular, losses in the 40s might not be as out of the question as one might think (think of an energized Republican base and a dispirited Democratic base with independents leaning to the GOP side).