After favoring Mitt Romney for the first week of October, our Obamanometer reading, measuring the direction of the economy, has now flipped back in President Obama's direction. The biggest change was last week's official jobs report, which showed that the unemployment rate dropped from 8.1 percent to 7.8 percent.
The latest jobs report contained conflicting information. One measure, a survey of businesses, showed that the economy added a fairly weak 114,000 new jobs in September. Another measure, a survey of households (which happens to be the one the unemployment rate is drawn from) showed that a whopping 873,000 new jobs were created last month. Both can't be right, and future revisions may show that the drop in the unemployment rate was a one-time anomaly. But for now, Obama can claim that the unemployment rate is lower than when he took office, an obvious boon for him.
Other things going Obama's way: A modest improvement in the housing market and gradual but sustained gains in consumer confidence. A recent uptick in gas prices has hurt Obama, but that could change as the price spikes caused by a couple of freak outages at West Coast refineries recede. The biggest negative for Obama right now is inflation, which has been higher than usual due to rising food costs, induced by the drought in much of the United States. Overall uncertainty, caused partly by the election itself, continues to dampen hiring, spending, and other factors that determine the direction of the economy. Meanwhile, Obama's listless performance in the first presidential debate is costing him with voters, as various polls show that Romney has rallied from a deficit to pull even with Obama. The economy may not be the only thing that matters to voters after all.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman
Methodology: The Obamanometer measures 22 economic metrics in 11 broad categories: the S&P 500 stock index, the price of gas, the employment situation, other job indicators, consumer confidence, leading economic indicators, inflation, housing, personal income, consumer spending, and the risk of recession as calculated by Moody's Analytics. The S&P 500 index and gas prices are updated daily, based on the level of change from one week prior. Other indicators are updated weekly or monthly as they come out. Changes are coded on a seven-point scale ranging from -3 to +3, with -3 representing a strongly negative economic development that favors Romney, and +3 indicating a strongly positive development that favors Obama. A score of 0 indicates no meaningful change. The individual scores are averaged each day on a weighted basis. The S&P 500 index, gas prices and the employment situation are weighted to represent one-half of the index value, since those are the most highly visible economic indicators. The other metrics represent the other half of the index value. Each day's overall Obamanometer reading ranges somewhere between -3 and +3. In visual terms, an overall reading of -3 would be represented by the needle pointing all the way to the left, while +3 would be represented by the needle pointing all the way to the right. If the overall reading were 0, the needle would point straight up.