Forget Florida. This election it is all about Ohio: without Ohio, Romney's winning chances plummet (as can be observed at the following interactive chart [9]), even if one ignores history which is that since 1862 no Republican has won the presidency without winning Ohio. This is a fact well-known to the Obama administration, which explains why the incumbent has spent so much time in the ravaged state, where he has spent so much time ruminating on the the Ohio "unemployment rate miracle." Sure enough, in September, the Ohio unemployment dipped to 7.0%, the lowest since September 2008! On the surface, a tremendous metric and great improvement for a state that would have certainly been firmly in the pro-GOP camp had Obama not been able to hammer on this statistic time and time again. Yet, as always, the unemployment rate is only part of the story. The bigger question is whether or not another data set is being fudged to make the Ohio jobs situation appear better than it is in real life. The answer is, predictably, yes.
As the chart below shows, even as the unemployment rate was declining, the labor force participation rate for this most critical of states plunged to 63.6%: the lowest since the "end of the recession" (even as the national LFP rate saw a modest uptick in the past two months), but more importantly is the lowest for Ohio since 1984. Which means one simple thing, a thing which can be inferred by looking at the historical convergence of the two data sets (participation rate is shown on the left inverted axis): once the pre-election "data nudging" ends, and the LFP is allowed to reflect reality, watch as the Ohio unemployment rate explodes to over 10%, which is what its fair value is according at least to the participation rate. But by then the game of pre-election optics will be over, and Ohioans will realize that promises, propaganda and reality never, ever coexist peacefully.
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BloombergBriefs confirms this observation:
The state of Ohio is seen as pivotal in the election. The size of the labor force in Ohio, which once was home to a vibrant manufacturing industry, has declined by about 85,000 workers over the past four years. The unemployment rate of 7 percent is below the national rate of 7.9 percent, probably because some people stopped looking for work and are not counted as unemployed. The labor force participation rate is 63.6 percent in both the U.S. and Ohio, indicating a “real unemployment rate” of something closer to 10 percent.
Q.E.D.
Finally, for those who say the drop in the participation rate is due to a demographic shift of the population, this is and has been a dead wrong statement. As we showed in the past week [11], virtually all job gains at the national level since Obama took power have occurred in the 55-69 age group, which has risen by about 4 million workers, even as those in the prime demographic of 25-54 have lost over 2 million jobs, for one simple reason: the elderly are forced to return to the labor force in droves because under ZIRP their saving have zero purchasing power, which in turn skews the hirings toward those who have little wage negotiating leverage and substantially more job experience than their younger, inexperienced job hunting competition.
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