By Jared Bernstein
In their second debate, Gov. Romney went hard after President Obama on the economic recovery, unleashing a fusillade of statistics as to how bad things were for average folks. Many of his stats were wrong or misleading -- he stated numerous times that 23 million people were "looking for work" or "struggling to find a job" when the actual number is 12 million (the larger number includes part-time workers who want full-time jobs); and his claim of half a million lost manufacturing jobs over the President's term neglected to distinguish the impact of the recession from the turnaround in factory jobs in 2010 (for the first time in over a decade, we've been adding manufacturing jobs, about 500,000 so far).
Whatever. The challenger always talks down the economy, and even with the recent improvements which I'll elaborate on further down, there are still far too many Americans struggling with a tough job market, stagnant earnings and stretched family budgets.
Yet compelling evidence is beginning to build showing that Mitt's assault on the "Obama economy" isn't resonating with voters as much as he'd like it to.
Housing is key here, as the sector finally seems to be on the mend:
- All three major home price indexes are showing consistent growth in prices, the first time that's happened since the bust.
- The collision of this home price appreciation and historically low mortgage rates is fueling a refinancing boom, saving an average of $2,200 from the typical family's annual mortgage debt payments. It's tough to refinance when you're underwater, but over a million formerly underwater homeowners have now broken the surface, and refi applications are actually up most in the states hardest hit by the housing crash (e.g., they're up 190 percent -- off a very low base -- in Nevada; they're up 140 percent in Florida).
- New home construction jumped 15 percent last month, posting its highest growth rate since 2008; the monthly data are volatile, but there are clear signs that the inventory overhang in housing is much diminished.
- This recovery has never had a solid housing market underneath it. To the contrary, housing -- typically a sector that helps us climb out of recessions -- has consistently subtracted from GDP growth. In the heart of the recession, it was drawing two to three percent off of growth. Now it's adding to growth -- not much, mind you…just a quarter to a half a percentage point. But at least it's finally pushing us up instead of pulling us down.
To be clear, this part of the economy is recovering, not recovered. Millions of foreclosures remain in the pipeline, though here, too, there's progress: foreclosure filings are at the lowest level since July 2007, according to RealtyTrac.
The second factor that's making it harder for Romney's "this recovery stinks" message to resonate is the job market itself. Here, you have to distinguish between levels and trends. The level of the unemployment rate, at 7.8 percent, is still too high. But it was 10 percent three years ago, so the trend is our friend.
In Ohio, to just pull a random state out of the air(!), the unemployment rate was 10.6 percent at the end of 2009, higher than the national average. Now, at 7 percent, it's lower (the auto's rescue is playing an important role in these numbers; national auto sales are on pace to top 15 million this year, the highest in four years). And it's the trend that influences people's feelings about the economy... momentum matters.
Same with job growth. In the second quarter of the year, we added about 70,000 jobs per month; in the third quarter, that pace more than doubled to 150,000.
No question, the economic bag is a mixed one. As noted, the still weak but healing job market is not generating real wage growth for most workers yet, and middle-class incomes remain well below where they were a few years ago. But to understand the economy at a point in time, you have to appreciate its dynamics -- not just where it is, but where it's headed.
Track these numbers long enough and you learn how fickle they can be. Such indicators could turn before election day and signal that Romney's purely negative view of the recovery is more resonant than I believe it's been of late. Like I said, though the outlook has improved, there are still too many people struggling with a tough economy.
In other words, we're not out of the woods. But we're on the right path through the forest, and the improvement in home equity, auto sales, the pace of job growth and consumer sentiments suggest we may be moving down that path with a bit more pep in our step. The implication is that while Gov. Romney's attacks won't exactly fall on deaf ears, voters may not hear those words as clearly as he'd like them to.
Jared Bernstein served from 2009 to 2011 as chief economist to Vice President Joe Biden, and as a member of President Obama's economic team. He is currently an MSNBC contributor.