Economy Now

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Looking for a 'super' low unemployment rate?

March 6, 2012: 11:30 AM ET

White House Photo by Pete Souza

Tuesday is purportedly the most super day of the primary season.

I think it might actually be quite boring. Tennessee and Ohio look close -- but the writing is on the wall in other states. Most forecasts show that Mitt Romney will capture the majority of delegates and thereby continue his long slog toward securing his party's nomination.

So let's jump ahead to the general election, where (last time I checked) the economy will be issue #1.

Much has been made of how low -- or high -- the unemployment rate might be on Election Day, and whether a particular number will be enough to ensure a victory for President Obama, or sink his candidacy.

Of course, the unemployment rate is not the best measure of economic strength, but it is without doubt the media's favorite shorthand measurement. And the number plays a large role in campaign trail rhetoric.

So how low might the unemployment rate go?

Matt McDonald of Hamilton Place Strategies has put together a few scenarios:

Assuming the labor force participation rate holds steady, the economy needs to add 232,000 jobs per month to get the unemployment rate below 8%.

If more people stop looking for jobs, and the labor force participation rate drops from 63.7% to 63.4%, only 144,000 new jobs would be needed each month to break 8.0%

Conversely, if a more traditional pattern emerges, and individuals return to the labor force as the economy improves, as many as 347,000 jobs would be needed per month to get under 8.0%. That would be a tall order, as the Obama administration has topped that number only once since taking office.

Now, no data shows 8% is the magic rate needed to guarantee re-election. Indeed, no president since Franklin D. Roosevelt has won re-election with an unemployment rate over 7.2%, if anecdotal evidence is to serve as a guide.

Most election forecasters and political scientists say the way people feel about the economy is far more important -- and if the economy is markedly improved each month leading up to November, that is a best-case scenario for the White House.

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About This Author
Charles Riley
Charles Riley
Reporter, CNNMoney

Charles Riley lives and works in Hong Kong, where he covers markets, economics and other high-impact stories across Asia. He previously worked for CNNMoney in New York and CNN in Washington. He tweets @CRrileyCNN

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