Nate Silver: Unemployment rate has "very weak correlation" w/incumbent POTUS' re-election chances

... if you’re going to write about the jobs numbers as a horse race story, you ought to do it right, and that means keeping an eye on the big picture.

In fact, looked at in the most literal way — how much President Obama’s re-election chances changed between 8:29 a.m. today and 8:30 a.m., when the numbers were released — the impact is probably quite minor. At the betting market Intrade, the contract on Mr. Obama’s 2012 chances has declined in value only barely, to implying a 57.9 percent chance of re-election from a 58.4 percent chance before the jobs numbers were published.

This was a terrible jobs report — there were no silver linings. But it’s still just one report, and there will be 16 more of them before Mr. Obama faces the voters. The unemployment rate, moreover, historically has a very weak correlation with an incumbent president’s re-election performance. Certainly, that does not mean you should ignore it — but it should be looked at along with other data that gets less attention, like reports on G.D.P. and disposable income and consumer confidence and the inflation rate, each of which have historically had more predictive power.

The employment report is also considered only a moderately important predictor of future economic data, because it can be more of a lagging than a leading indicator.

http://fivethirtyeight.blogs.nytimes.com/2011/07/08/in-coverage-of-jobs-report-misplaced-attention-to-horse-race/#more-13027