One bad economic data blip is easy to ignore. When jobless claims jumped up sharply a week ago, analysts blamed Easter-related calendar irregularities and warned that there is always a lot of “noise” in a weekly data series. But then the number of new claims remained uncomfortably high in the report released yesterday, and brows started furrowing everywhere (except, perhaps, in Mitt Romney’s campaign headquarters.)
Suddenly, the four-week moving average, a gauge designed to smooth out all that weekly noise, was up to its highest point since January. Coming on top of a weaker-than-expected labor report for March, signs that industrial production growth is slowing, and continued softness in housing, the conventional wisdom on the state of the economic recovery took a swift turn for the bearish. The New York Times and Wall Street Journal immediately published nearly identical articles, “Fears Rise That Economic Recovery May Falter in the Spring,” and “Economic Signals Stir Worries.”
We’ve seen this movie before. Last year, at almost exactly the same point in the spring, a nascent recovery curled up in the fetal position and expired. But that time around, there were obvious reasons for the slowdown: the earthquake-tsunami-nuclear disaster in Japan, panic over the European sovereign debt crisis, a Libya-related gas price spike, and the prospect of a government shutdown.
This time, there haven’t been any disasters to shake up global supply-and-production chains. Europe, while still a mess, doesn’t seem as perilously close to implosion as it did a year ago. Yes, gas prices spiked again, but may already have peaked. All of which, paradoxically, contributes to a sense of greater unease. If there are no clear external factors explaining the sputtering U.S. recovery, then maybe the relatively strong performance at the end of 2011 and beginning of 2012 was just a mirage.
Except, here’s what we do know. By just about every measure, the U.S. economy is significantly stronger now than it was a year ago. Retail sales are up, auto sales are surging, and labor markets are much more stable. Tax receipts for most states have exceeded their pre-recession highs. American households are loaded down with less debt. Estimates of GDP growth for the first quarter of 2012 have steadily risen over the last two months. In the long-term, a very slow recovery still appears to be solidly in place. That’s good news for the United States.
But with a presidential election seven months away, America’s attention is all focused on the short-term. And from a Democratic perspective, time is fast running out for an economic recovery to have any meaningful positive effect on Obama’s chances for retaining the White House. The opposite may be more likely to be true: If elevated jobless claims translate into another weak labor report for April, negative sentiment about the state of the economy may solidify, regardless of whatever long-term trends are in place.
The first round of polling since Mitt Romney locked down the Republican nomination for president suggests that the election in November will be excruciatingly close. A strong economic recovery, consolidating throughout a long summer, could have changed that calculus. But as of right now, the economy is saying, as clearly as we can interpret its muddled, contradictory, constantly shifting signs: Don’t look to me for help: You’re on your own.