NEW YORK ( TheStreet) -- Snap judgments on whether January's positive jobs numbers indicate impending doom or a boom on President Obama's re-election chances might be greatly exaggerated. January jobs numbers were essentially positive as the economy added 243,000 jobs and cut the unemployment rate to 8.3% from 8.5%, but what happened in January won't necessarily transform into November votes.
"Don't muck it up," Obama said, referring to Congress, in a speech after the Bureau of Labor Statistics had released the jobs numbers. "The number is high, but the trend is in the right direction. ...To have successive months of increasing employment and decreasing unemployment rates, those are good signs," said David Weiman, a Barnard College economist. "I do think that's what individuals are looking at -- they're obviously concerned where they are, but they're also sort of figuring out what's going to happen down the road." Weiman warned that recent positive trends aren't necessarily permanent for 2012, and he specifically cited the hope that nothing goes "crazy" in Europe. The continent continues to struggle with the sovereign debt crisis that has roiled eurozone nations since 2011. Republican front-runner Mitt Romney released his spin on Friday's jobs numbers, as he said he welcomed the unemployment decline, but that the president's policies have prevented true economic recovery. "Last week, we learned that the economy grew only 1.7% in 2011, the slowest growth in a non-recession year since the end of World War II," Romney said in a statement. "Unfortunately, these numbers cannot hide the fact that President Obama's policies have prevented a true economic recovery." Romney tactically chose to highlight overall economic growth in order to avoid more favorable comments on the strong uptick in job growth -- a number the Obama campaign is likely to tout for the next month. The Romney tactic seems like a bag of mixed goods. One economist has argued that unemployment is part of a greater collection of economic indicators that could determine November's election. Yale economist Ray Fair said in an interview that his presidential vote equation argues if per-capita GDP has grown in the three quarters before an election, then voters would take it as a positive sign. He adds that the unemployment rate and job growth are two indicators correlated to overall growth.
"What the vote equation suggests is that if the economy has been growing at the time of the election, even though the level of the unemployment rate may still be above full employment, then voters take that as a positive sign," Fair said. Conceivably, Romney can't continue to ignore or brush aside declining unemployment rates, as it is a crucial component voters use to make a presidential pick. Conversely, the Obama campaign can't rely on one or two months of better-than-expected results to win the majority of the electorate. "But it's not just one month, it's the growth rate over the whole year that matters," Fair said. "So, if this kind of growth rate continued over the entire year, or up until the election, then of course that would be a positive for
Obama, but just one month is not enough to be able to say too much." Returning to the hard jobs numbers, it's also important for voters to dig further to get a fuller sense of what they mean. Labor-force participation rates, for example, have an effect month to month. After two successive surprise months, (December unemployment dropped to 8.5% and then January unemployment dropped to 8.3%) Weiman said it could motivate those people who haven't actively sought employment to re-enter the market. This influx could cause an uptick in unemployment numbers as more people would have leaped back into the work-finding process, thus inflating the total number of employment seekers, while the same number of job openings would have remained the same. "What you want to say is that there is job growth, and that's important sign of economic expansion, but is it robust enough to start whittling away at the -- it's like this huge stock, huge number of unemployed or underemployed individuals," Weiman said. "And the answer is it looks like no, because December you still saw people leaving the labor market." Working age adults not participating in the labor force in January, increased by 88,000. Translation for Obama's re-election hopes? Wait and see. -- Written by Joe Deaux in New York. >Contact by Email.