Politics and Profits: Business and the 2008 Election

Unemployment hits a 5-year High

Of all economic metrics, by far the greatest political weight is assigned to the unemployment number, which today reached a 5-year high of 6.1 percent.

The party out of the White House always, always blames bad job numbers on the party in power. So, whatever convention bump John McCain and Sarah Palin get from this week’s whoop-de-doo will be freighted with renewed concerns about a shrinking economy for ordinary workers.

In addition, the economy suffered a net loss of 84,000 jobs in August, according to the U.S. Department of Labor, compared to a revised reading of a 60,000 job loss in July.

The U.S. economy has lost 605,000 jobs so far this year.

The jobs report immediately drew comment from the presidential candidates as well as the Bush administration.

The White House pointed to other economic readings, including last week’s gross domestic product report. It showed second quarter growth jumping to a 3.3% annual rate, helped by economic stimulus checks and strong exports.

“While these (jobs) numbers are disappointing, what is most important is the overall direction the economy is headed,” said the White House statement.

But the campaign of Democratic presidential candidate Barack Obama said the report points out the failure of Republican policies.

“John McCain showed last night that he is intent on continuing the economic policies that just this year have caused the American economy to lose 605,000 jobs,” Obama said in a statement. “John McCain’s answer is more of the same: $200 billion in tax cuts to big corporations and oil companies, and not one dime of tax relief to more than 100 million middle-class families.”

The McCain campaign argued that Obama’s economic policies would cause more job losses in the future.

“Sadly there are those who believe that to grow this economy we must raise taxes, impose costly new mandates and isolate America from the global economy,” McCain said in a statement. “When our economy is hurting, the last thing we should do is raise taxes as Barack Obama plans to do and has done.”

This round goes to Obama. Not because people think, contra McCain, that we should raise taxes in the face of a slowdown.  It’s more primal than that. It’s “throw the bums out,” which is an archaic term for “change.”