Campaigns hope to receive boost from economic data ahead of election day

Campaigns hope to receive boost from economic data ahead of election day

In the final full week before the presidential election, a slew of economic data will provide a clearer picture on the economy's trajectory, possibly lending a last-minute boost to one of the campaigns.

Nearly two dozen economic indicators are set for release next week — headlined by the October jobs report just four days before voters head to the polls — cutting across a swath of the economy from consumer confidence to housing and manufacturing.

Good numbers could bolster President Obama's chances in the final days of a campaign in which he has sought to convince voters to stick with him for another four years.

Less-impressive results could help Republican nominee Mitt Romney with the election coming down to the wire.

The indicators include ADP's employment report on Wednesday, a measure of private-sector job growth, housing market data including the Case-Shiller 20-city housing price index, construction spending, an index measuring manufacturing growth, consumer confidence and personal income.

But the jobs report, which is released at the end of the week, will be the most closely watched.

"With regards to the election, I have to think that the data next week, particularly the jobs report, could have an impact," said Keith Hall, a Mercatus Center scholar at George Mason University and former head of the Bureau of Labor Statistics.

"If the report isn’t strong, it will keep voter focus on the poor performance of the economy. If the report is strong, it will reinforce the perception of some that last month’s report showed an improving labor market."

Mark Zandi, chief economist with Moody's Analytics, said this jobs report should not affect voters’ stances, although much lower or higher numbers might.

He is expecting an increase of 140,000 jobs while the jobless rate to ticks up to 7.9 percent.

"Layoffs remain very low, but so does hiring," Zandi said.

"Businesses will remain cautious and won’t increase their hiring until policymakers address the fiscal cliff, the debt ceiling and long-term deficit reduction."

Hall outlined two scenarios for the jobs report: modest growth of about 120,000, similar to last month, combined with either a rise in the unemployment rate or a fall in labor force participation; or an increase in job growth, more than 150,000, with no change in the unemployment rate.

He suggested that the first option is more likely because economic growth, which came in at 2 percent in preliminary estimates for the third quarter, doesn’t support a larger increase in job growth.

Employers added 114,000 jobs in September while the unemployment rate dropped to 7.8 percent in September, the lowest level since Obama took office in January 2009 but still well above previous post-recession figures.

But Hall and other economists are concerned that economic growth is too low to produce more jobs and a decline in business investment, an early predictor of job growth, doesn't bode well for the final three months of the year.

"I find this a genuine concern since it is suggesting that job growth may decline in the fourth quarter," Hall said.

Josh Bivens, research and policy director a the Economic Policy Institute, called the 2 percent, "too slow to support solid job growth."

The so-called fiscal cliff also looms over the economy, as businesses hold off on hiring and investment until the Congress and the White House reach an agreement on spending cuts and tax increases.

The National Association of Manufacturers estimated Friday that this year's economic growth numbers are down 0.6 percent because of the fiscal cliff.

An agreement would go a long way to washing away persistent uncertainty, business groups say.

A short-term agreement is expected in the lame duck session and Obama suggested that a grand bargain could be in the offing by next summer if he holds the presidency.

In the meantime, signs of growth abound, although figures are still far from robust.

Consumers are the most confident they have been in five years, the Thomson Reuters/University of Michigan survey showed Friday.

Consumer spending also increased 2 percent, but most of the increase was supported by a nearly 10-percent jump in federal government spending, the largest in more than two years, according to the GDP report.

Home prices are up, new home construction and building permits are on the rise, builder confidence hit a six-year high recently and historically low mortgage rate are bolstering the market's gradual recovery.

Those figures are bolstered by the Federal Reserve's commitment to purchasing about $40 billion in mortgage-backed securities each month until the employment situation shows significant improvement.