Could growth trump unemployment in election?

If the unemployment rate remains high, it is received political wisdom that President Barack Obama's ruling Democrats will be punished by the voters in congressional elections in November.

But some experts question the assumption that high joblessness will have such an impact, saying history and research suggest economic growth could be a bigger factor.

This could bode well for the Democrats, who are looking to the economy to recover from recession in time for the election, when they hope to retain a majority in both chambers of the U.S. Congress.

All 435 seats in the House of Representatives and a third of the 100-seat Senate will be contested in the election, which is widely seen as a referendum of Obama's performance halfway through the four-year term he began in January 2009.

Unemployment changes very slowly ... but if the economy is growing quickly or declining voters can perceive that very directly and can vote on that, said University of Denver political scientist Seth Masket, a specialist on the issue.

If you are trying to predict what is going to happen in the November election it is best to look at economic growth rather than the unemployment rate, he said.

The recession began in late 2007 but the economy returned to growth in the second half of last year and is gradually improving. [ID:nnWEQ003883]. A Reuters survey has forecast that data being released on Friday will show the economy expanded at a 3.4 percent annualized rate in the first quarter following a 5.6 percent pace in the fourth quarter.

Unemployment remains high. In March the rate was 9.7 percent, about double the level 2-1/2 years ago.

Obama has made job growth one of his main priorities and many Democrats are watching the figures nervously.

But Masket says history suggests that even these dire numbers may well have little impact on November's vote.

Analyzing mid-term elections since 1950 and annual unemployment figures and the changes in them, he found basically no relationship at all between unemployment and gains in the House of Representatives for the opposition.

He said while former President Ronald Reagan faced high unemployment in 1982 and his Republicans lost lots of seats that year, it was no worse than the Republicans' showing in the 2006 mid-term when George W. Bush was president.

MANY MAY NOT VOTE

The people most likely to be unemployed are those with less education and less income to begin with and they are somewhat less likely to vote in a mid-term election regardless, Masket told Reuters in a telephone interview.

The current economic environment has certainly hit blue collar workers the hardest and the data clearly shows a direct link between educational level and unemployment data.

While the unemployment rate in March was 9.7 percent, for those without a high-school diploma it was 14.5 percent. For high school graduates without any college it was 10.8 percent.

But for those with a bachelor's degree or higher it was 4.9 percent -- a scenario which could have interesting implications for the election, as the highly educated have become a vital base for the Democratic Party.

Exit polling data suggests Obama had a 58 percent to 40 percent edge over Republican challenger John McCain with voters who had at least some post-graduate education.

By contrast, among white working class males -- who have been suffering very high job losses -- McCain trumped Obama by a margin of 59 percent to 39 percent.

Blacks are also been hard hit. Their unemployment rate was 16.5 percent in March. But African Americans also vote reliably Democratic and without Obama himself on the ticket, they are likely to turn out in fewer numbers this November anyway.

John Sides, a political scientist at George Washington University in Washington who specializes in campaigns and elections, says other research suggests that growth may turn out to be more crucial to voters' perceptions.

Economic expansion this year for example could occur without an appreciable impact on joblessness.

The evidence and research suggests that economic growth will help the Democrats even if the unemployment rate hasn't come down very much, he said.

He said that people often based their evaluation of the economy on how it appeared to be doing as a whole.

It may be the case that people's evaluations of the economy are based largely on how the economy is covered in the news. If economic growth starts generating positive news, that may start to shift people's evaluations, he said.

ANGRY WHITE MEN

Many other analysts believe unemployment will indeed be a driving factor.

Angry people vote and the anger is on the white male blue collar side of the ledger ... Unemployment cannot not have an impact in November, said Dennis Goldford, a political scientist at Drake University in Des Moines, Iowa.

Labor economists point out that for the working class the current labor market situation is bleaker than at any time since the depression of the 1930s and may even be just as bad.

Ishwar Khatiwada, an economist at the Center for Labor Market Studies at Northeastern University in Boston, estimates that between the fourth quarter of 2007 and the first quarter of 2010, around 6.5 million blue collar jobs were lost in America. This is almost 20 percent of all blue collar jobs.

Looking at this grim situation, analysts have said unemployment could play a big role come November in industrial Midwest states where Republicans are already targeting Democrats seen vulnerable on issues such as healthcare reform.

And at this stage unemployment is certainly on people's minds. In a poll by the Pew Research Center in February unemployment was cited as the most important national problem by 31 percent of respondents, topping all other issues including the general economy. This compared to 19 percent in August of last year.

(Editing by David Storey)