Obama, Romney Avoid the Elephant in the Room

NEW YORK (TheStreet) -- President Barack Obama and Republican rival Mitt Romney, in the final three months on the campaign trail, differ in their views on the state of the U.S. economy.

But both are avoiding the real problem: Europe.

Friday's U.S. employment report sent stocks soaring, as companies added a better-than-expected 163,000 jobs last month. Still, the unemployment rate crept up to 8.3% from 8.2% as some Americans left the labor market. Obama and Romney, of course, spun those numbers in their favor.

Still, the July jobs report "meaningfully changed the downward trend in unemployment," said Doug Cote, chief market strategist at ING Investment Management. "The fundamentals find a way to march forward despite global risks, and we think this is more evidence that there's resilience in the private economy."

Enter Europe into the American election news cycle.

Speeches by Obama and Romney on Friday failed to mention that Europe has continued to be a massive drag on global growth and for two years has affected sentiment in American markets.

The president chose to discuss tax cuts for the middle class, while Romney chatted about the underemployed or those who had stopped looking for work.

What must be acknowledged is that the direction of the U.S. economy depends on Europe, Barnard College economist David Weiman said.

"Especially because Obama was pushing exports as the saving grace of the U.S. economy," said Weiman. "If exports are lagging because of Europe, [economic growth] is not likely."

Romney slammed Obama at a speech in North Las Vegas, Nevada, on Friday. He said 42 straight months of unemployment above 8% under Obama is the longest ever recorded in U.S. history. He called it an extraordinary record of failure and said Obama's policies have backfired because the president thinks the government enables America to work.

Romney didn't note that employment rose in July by 163,000 jobs, which was better than the 100,000 expected by economists. It was an improvement of almost 100,000 from June.

At the White House Friday, Obama referred to the 172,000 private-sector jobs the country added in July, choosing to exclude numbers that showed the government payroll contracted by 9,000. The president said Americans knew when he took office that it would take time to grow jobs -- something that has become a common remark by the White House.

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