The Election and the Economy

For all their differences, President Obama and his predecessor, George W. Bush, share an unusual trait among recent presidents.

Both men, seeking reelection after blistering first terms, came into the heart of the campaign carrying a heavy burden:

Neither had managed to boost the number of jobs created in the course of his presidency above the number on the U.S. payrolls when he began.

Over the last 40 years, Bush and Obama are the only presidents with such a first-term legacy. Even Jimmy Carter, whose opponent, Ronald Reagan, asked, "Are you better off than you were four years ago?" pulled off better first-term job creation than either Obama or Bush.

"We know that the economy is everything for voters," said Christopher Borick, director of the Institute of Public Opinion at Muhlenberg College in Allentown.

That's why all eyes were on Friday's post-convention news from the U.S. Labor Department - that 96,000 jobs were added to the nation's payrolls in August and the unemployment rate dropped to 8.1 percent.

The report was neither good enough to help Obama nor bad enough to boost GOP opponent Mitt Romney in what many pollsters are calling a dead heat.

Maybe history can hint at what might happen on Election Day, based on the economic conditions that prevailed in the Augusts and Septembers of past election years.

Friday's report "will matter, but it's only one report," Temple University political science professor Christopher Wlezien said. "At this point, it would take quite a lot to fundamentally change people's assessments of where the economy is heading before Election Day."

Richard Nixon. It's hard to imagine now that in August 1968, when Nixon was running for his first term, the jobless rate was 3.5 percent. By December 1969, however, the nation had fallen into a yearlong recession.

As Nixon began campaigning for reelection, the recession was a distant memory and the economy had expanded by 2.8 million jobs in 1972 alone. Even so, by August 1972, voters found themselves preoccupied with a burglary at Democratic National Committee headquarters in Washington.

Nixon won a second term despite the Watergate scandal. But he faced other problems: spiraling inflation and an oil crisis. In August 1974, he resigned to avoid being impeached.

Jimmy Carter. "No Republican was going to win the White House in 1976 given the scandal and the terrible economic crisis," University of Pennsylvania history professor Walter Licht said.

And no other White House occupant in the last 40 years would preside over job market growth as impressive as Carter did. Between January 1977, when he took office, and August 1980, when Carter was battling Ronald Reagan, payrolls had expanded overall by 11.6 percent.

Timing is everything, though. As the 1980 campaign year began, Carter faced a recession triggered in part by the 1979 oil crisis. The recession lasted six months, with unemployment topping out at 7.8 percent.

"Carter comes into office at the point of real eclipse," Licht said. American manufacturing began a trouncing that would last for decades as Japanese and European companies gained a U.S. foothold.

"Toyotas and Panasonics are flooding the American marketplace," Licht said.

Besides lower pay, a recession, and gas rationing, voters focused on the Iranian hostage situation, which by August 1980 was in its ninth month. The hostages were released minutes after Reagan, who readily defeated Carter, took office in January 1981.

Ronald Reagan. "Reagan inherited a bad mess," University of Maryland economist Peter Morici said. "We were coming off an economy with two oil embargoes, and the legacy was very high inflation that neither [Nixon's successor Gerald] Ford nor Carter could end."

Carter appointee Paul Volcker had stayed on as chairman of the Federal Reserve. His steps to stabilize inflation helped lead the nation into a severe recession that began in July 1981 and ended in November 1982. The jobless rate reached 10.8 percent - higher than the 10 percent peak in the 2007-09 recession.

Shortly after Reagan's 16-month recession ended, job creation soared, instead of crawling as it is now. Reagan coupled tax cuts for the wealthy with increased military spending.

"Reagan leaves the worst deficit in American history, if you do it proportionally, and that's going to doom his successor," Licht said.

George H.W. Bush. When Bush won, unemployment had fallen to 5.4 percent. But soon he faced a recession.

"He was very defeatable in 1992 because of the poor economy," Licht said.

Bill Clinton. In 40 years, Clinton has been the only president to lead the country through two terms without a recession. Payrolls grew by 9.4 percent over his first term and 8.9 percent in his second term. When he left office, the jobless rate had fallen to 4.2 percent.

Clinton raised taxes on the wealthy, Licht said, allowing him to lower the deficit.

Meanwhile, "there was a boomlet pushed by technology. Good union [manufacturing] jobs are gone, but then you have this boom in service-sector jobs - people washing dishes behind counters, cooking food behind counters, and changing sheets in hotels."

George W. Bush. Bush landed two recessions. The first, starting in March 2001, less than two months after he was sworn into office, was a triple whammy: the dot.com bust when early promises of online business growth didn't materialize; the severe damage caused by Tropical Storm Allison, and the Sept. 11, 2001, terrorist attacks.

Officially, the recession ended in November 2001, but employment declined for 21 more months.

By August 2004, when Bush was running for reelection, payrolls had dropped by 856,000 jobs, or 0.6 percent, from the start of his term.

To compare, this August, with Obama fighting to win a second term, the nation's payrolls declined by 261,000 jobs, or 0.2 percent.

Bush's second term began on an economic upsurge, but in fall 2007, financial markets began to collapse, wounded by the mortgage crisis. A devastating recession followed, starting in December 2007.

In 40 years, 2008 was the only election year in which payrolls fell for all 12 months.

Barack Obama. When Obama took office in January 2009, the jobless rate was a relatively benign 7.8 percent. But the situation quickly worsened.

By the time the recession officially ended in June 2009, the unemployment rate had reached 9.5 percent, peaking at 10 percent in October.

Payrolls continued to decline until February 2010, with job creation growing slowly, yet steadily, since.

(PDF: Election-year and recession employment information)

Election-Year Employment Information (jobs are in millions)

Recession and Employment Information (jobs are in millions)