By far the biggest factor driving the success of President Obama's agenda, and the political landscape in 2010 (which itself may determine how much Obama can do starting in 2001), is the unemployment rate. For quite a while, nearly everybody has been predicting unemployment to top 10%. The Wall Street Journal today makes a fairly convincing case that employment will bounce back strong. The most interesting point to me was the nature of job losses:
[O]ne thing different about this recession -- and one more reason the job market may come back more quickly than in the downturns of 2001 and 1990-91 -- is that so many of the job losses have been at the service-related companies that have come to dominate U.S employment. Since the recession began, 3.3 million service-sector jobs have been lost, a 2.9% decline that is the largest in data going back to 1939. In comparison, the previous two recessions each saw service-sector jobs fall by 0.5%.
Many service-related firms may have a more pressing need than manufacturers to rehire workers as demand comes back.
Nate Silver also has his eye on the ball, and, in a quantitive yet unconventional post, predicts that unemployment probably won't hit double-digits. I have no idea if this is right, but it's pretty interesting to see some chips in what was once a near-unanimous prediction. To be sure, the economy is likely to remain poor for most people for a long time, and the Democrats are going to bear the brunt. But how bad, and how much of a brunt, is the big medium-term question in American politics.
--Jonathan Chait