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Saturday, December 3, 2016

Nov. 6 (Bloomberg View) — In recent months, I have argued that solid jobs reports wouldn’t help the Democrats in the 2014 elections. We have another excellent set of numbers today, showing that the unemployment rate fell to 5.8 percent in October, the lowest level in six years.

This report will matter … for 2016. Or, as Ryan Lizza tweeted this morning: “The jobs report that came out today is probably more important for 2016 than anything that happened on Tuesday.”

Well, not this particular jobs report in isolation. But cumulatively, the odds are increasing that voters are finally going to believe the economy is growing. The economic picture is hardly perfect, but it’s also not unusual for perceptions to lag any improvement. For example, 20 years ago, Republicans would tell you that the recession that began in 1990 had ended well before voters went to the polls in 1992 and kicked President George H.W. Bush out of office because of the economy’s performance.* But that electorate turned around and punished the Democrats in 1994 for that same long-ended recession. It took about three or four years for voters to acknowledge good times.

This time, it’s taken even longer for voters to decide the economy has turned around. The lag is consistent with a far deeper recession and halting recovery. But I suspect we’re very close to a change in perceptions, at least if solid numbers keep rolling out. For example, Gallup’s “economic confidence” index is very close to turning positive for the first time since the recession. Consumer confidence is up, too, and the number of Americans who think the economy is in a recession, while still high, is declining.

So in another year or so, we will get to the point when the economy is strengthening and voters start to believe it, which should help Democrats in 2016. That’s true whether or not President Barack Obama’s policies are responsible; it’s true even though a Republican Congress could claim credit. On this, the record is clear: A good economy helps the party that holds the White House.

The economy, however, isn’t the only thing that will affect the 2016 elections; foreign policy disasters would hurt Democrats, as might any other large-scale domestic policy failure. And Republicans should be in a decent position for the presidential race, given that three consecutive terms for any party are rare. So reading the early tea leaves, I’ll say that 2016 begins as a tossup. But the more positive economic news we get, the better the Democrats’ chances.

*Of course, the same Republicans who tell you that Bush had saved the economy also told Bush that he deserved his fate for accepting (supposedly) economy-destroying tax increases. I never understood how those two arguments fit together.

AFP Photo/Brendan Smialowski

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