A few weeks back, I was watching a political chat show on television (I tried to track down a transcript, but couldn't find it, sorry), and the roundtable of pundits was asked what they thought the unemployment rate would be on election day in November. The responses (from a wide range of political viewpoints, left and right) were universally pessimistic -- from memory, they ranged from 8.7 percent to above 9.1 percent. No one was willing to go optimistic, at least on the air.
But what if they're all wrong? Even raising this question may lead to accusations of Pollyanna-ism, or rosy-colored-glasses-ism or whatever else you'd like to call it. The economy has been in the doldrums for so long that it seems nobody believes it will ever change, and even suggesting such a thing leads almost immediately to being seen as "out of touch."
This is understandable for politicians. If you make rosy economic predictions which turn out wrong, then your political opponents will never let you forget it. Pundits see themselves in the same boat, because risking a loss of credibility is just as bad (as they see it) for a pundit as for a politician.
But the economic news does indeed seem to be getting better out there. Unemployment has dropped a half a point in a matter of a few months, and today there was news that new filings for unemployment are at the lowest level since the recession began. If this leads to January's unemployment number going down once again, it's going to start entering the American consciousness and even the media's conventional-wisdom groupthink. There are signs that Americans are starting to feel slightly more optimistic about the economy already, and a steady stream of more good economic news will reinforce this trend.
President Obama can't really get out in front of the trend yet, though. He risks the most if he starts saying "we've turned the corner," and then things go south once again. And even if the economy does improve substantially over the next six months or so, it may not be enough to get Obama re-elected. Pundits are fond of pointing out that no president has been re-elected with unemployment much above seven percent since F.D.R. -- but then the recession Obama has been dealing with has been more severe than any we've seen since F.D.R.'s time, so it's hard to tell. F.D.R., after all, was the most re-elected president in American history. If unemployment goes down to, say, 7.6 percent by summertime, it won't be the number so much as the trendline the voters may be looking at. That's still a high rate, but if it's been coming steadily down voters may decide to "stay the course" anyway.
It's still early days to even know if the economy is truly about to enter a strong recovery or not. A few data points on a graph do not always a trend line make, to put it another way. But from what I have personally seen in previous recessions, there always seems to be a real "tipping point" where American businesses collectively decide that things are going to be better soon -- and then they start hiring people and fulfilling their own prophecy. This could indeed be such a turning point.
Of course, there are still all kinds of caveats. Europe could self-destruct, which would tank the American economy as well (and there would be precious little we could do about it, if it happens). The Middle East could explode, once again. Gas prices could become a bigger deal than unemployment. There are plenty of ways things could go wrong, in other words.
But still, it has become worth it to at least consider optimism when viewing the immediate future of the American economy. An optimistic outlook may turn out to be wrong, but at this point it is becoming more and more of a possibility that deserves some attention. Maybe the next time the question is asked of a panel of pundits, one of them will go semi-bold and predict an unemployment rate of 7.9 percent by election day. Three months ago, such a prediction would have been considered lunacy, but today it is looking much more likely, if the current trends hold.
-- Chris Weigant
Follow Chris on Twitter: @ChrisWeigant