Recovery timing, jobs key for 2010 U.S. vote

The U.S. recession may be over before the year ends, but the initial stage of recovery could see few new jobs, potentially leaving the 2010 congressional elections wide open.

The midterm elections, which come halfway through a president's term, are often tough for the party occupying the White House. Democrats have big majorities over Republicans in both chambers of Congress.

The November 2010 elections will widely be seen as a referendum on President Barack Obama's economic policies, which include a stimulus package of almost $800 billion and a pledge to save or create 3 million to 4 million jobs.

Obama's popularity remain high five months into his presidency and polls show Americans confident he can fix an economy suffering one of its worst downturns since the Great Depression of the 1930s. Polls also find voters saying an economic recovery will take a number of years.

But finding the jobs Obama has promised may prove tough. Data on Friday showed more jobs disappearing because of the slumping economy, although the pace of losses slowed. U.S. employers cut 345,000 jobs last month, the fewest since September and far fewer than forecast.

The Labor Department said the unemployment rate hit 9.4 percent, the highest since July 1983. Many economists see the initial stage of any rebound from this recession as a jobless recovery.

I think it's bleak, very bleak leading up to the midterms. I think the goal will be to stop shedding jobs by that point, said John Diamond, an economist at Rice University in Houston.

If you look back at other recessions, the first thing you see is these jobless recoveries. For 2001, the recession only lasted eight months but the labor market didn't bottom until 24 months after the end of the recession, he said.

The recession during George H.W. Bush's presidency ended in 1991 but the sluggish recovery contributed to his defeat to Bill Clinton in 1992.

The severity of the current recession and the structural changes that will emerge from it in huge sectors such as the auto industry mean job growth could be delayed even further than normal, analysts have said. Most forecasts do not see economic growth exceeding a modest 2.5 percent for 2010.

RELIEF MAY TRANSLATE INTO POLITICAL GAINS

But some analysts say the harshness of this downturn, which began in December 2007, means any relief will produce political capital for Obama's Democrats. Many economists see the recession ending before the end of this year.

I think the recovery even if it is a jobless recovery will benefit the Democrats in 2010, said Cal Jillson, a political scientist at Southern Methodist University in Dallas.

This is because the fear and panic was so great in 2008 and the first part of 2009 that just the relief that a bottom has been found and a recovery begun should sustain the Democrats through 2010, he said.

Timing is everything.

Jillson said there were many studies of voting behavior that suggested a recovery needed to be under way for at least a few months before a party in power would benefit.

There is a three- to six-month lag in people's appreciation of a change in the economy. So if the economy is recovering in the second half of 2009, it will be clear in people's minds by November 2010, he said.

There are plenty of examples from recent American political history to support such a view.

The severe recession in 1982 hurt the Republicans in that year's midterm elections.

But by 1984, (former U.S. President) Ronald Reagan could talk about 'Morning in America,' Jillson said. Reagan easily won a second term in the White House that year as he rode the recovery wave.

Analysts say a lot will depend on how people see the future shaping up.

Do you think things are getting better? That is a more important political question than a person's particular economic or financial situation at the moment, said Dennis Goldford, a political scientist at Drake University in Des Moines, Iowa.

Peter Brown, assistant director of the Quinnipiac University Polling Institute, said: The issue is not what the economic statistics say, it is what people feel. They have to feel that things are getting better for them.

It depends on what people think in their guts. If they think they are getting better, they are more likely than not to credit the people in power, he said.

(Editing by Peter Cooney)