By Ira Kantor | The Boston Herald | September 6, 2012
Soaring financial markets may bode well for President Obama’s confidence as he accepts his party’s presidential nomination tonight in North Carolina, but it will only take a poor jobs report for August to immediately pull the rug out of any economic momentum the commander in chief is feeling, economists said today.
The Standard & Poor’s 500 index hit its highest level since January 2008 today, while the Dow Jones Industrial Average and Nasdaq also saw surges after European Central Bank President Mario Draghi unveiled a new program to save the euro through the purchase of government bonds from struggling countries — a program that has no set limit on how much can be bought.
European markets also spiked in the wake of the ECB’s program announcement.
Yet Northeastern University economist Alan Clayton-Matthews said the ECB’s news would not have an impact on Europe’s real economy for “at least a couple of quarters,” making it too late to affect the U.S. economy in terms of job growth.
“The economic impact for the election just won’t be there,” he said. “It’s too late.”
The U.S. economy added 163,000 jobs in July while the unemployment rate climbed a tenth of a point to 8.3 percent from June. Despite the slight rise, the economy added only 80,000 jobs in June.
If August’s employment report, which will be released tomorrow, follows the trend of “relative mediocre job growth,” the Romney and Obama camps revert back to a “jump ball” status with both sides using the news to their advantage, Clayton-Matthews said.
“If job growth comes in in the same kind of neighborhood as last month, I expect the effect on the political campaign will be much like it’s been over the last couple of months, leading to a big disagreement between both sides on what this means for the president’s performance to date and what it means for the future of the economy for the next four years if Obama gets elected,” he said.
Michael Goodman, a University of Massachusetts at Dartmouth public policy professor, added tomorrow’s jobs report would “have a lot to say about whether there’s a good news bounce in economic terms coming out of convention week.”
“The bottom line in the U.S. is we need to create more jobs and if job creation performance was better than expected in August, we’ll see that in the jobs report, and if it isn’t, I don’t think a one-day jump in the stock market or seemingly good news from Europe is going to counteract the disappointment that would be associated with another slow growth month,” Goodman said.