News Column

Swing States Faring Better Than US Overall

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In a state President Obama needs to win, the incumbent should be pleased by the sales report from Tom Sarach's staffing firm in southeast Virginia.

"Last year was a record year," said Sarach, president of Reliance Staffing, which has four offices in the Hampton Roads area. "This year we're doing even better."

The growing demand for Sarach's temporary workers helps explains Virginia's 5.7 percent unemployment rate, far below the national average of 8.3 percent. Home to a large chunk of the federal bureaucracy, Virginia's relatively strong labor market helps explain Obama's narrow lead in Virginia as the national economy recovers at the slowest pace since the 1930s.

"What's making Obama much more competitive here is the economy," said University of Virginia political scientist Larry Sabato, the leading political guru in a state seen as a prime battleground in the 2012 election. "If you have economic conditions in Virginia that are this good and he can't win, how can he win elsewhere?"

With polls tight and the national recovery limping along, state economies could provide the difference in Mitt Romney's bid to unseat President Obama. While the U.S. unemployment rate gets the most attention from commentators and candidates, it's the state-level data that best reflect what voters face on a daily basis.

To get a more nuanced look at the economy's role in the presidential election, The Miami Herald analyzed eight economic indicators for the 14 states where polls are the closest. The exercise was designed to roughly answer the question Ronald Reagan made famous in 1980 when unseating another Democratic president battling a battered economy. "Are you better off than you were four years ago?"

No swing state could honestly answer yes to that question -- none have seen hiring return to where it was in 2008. But some clearly have done better than others, and the bulk of them are outpacing the country in some key metrics.

Ten have lower unemployment rates than the current national average, which hit 8.3 percent in July. The federal labor agency will release state-level unemployment reports for July on Friday. Only three swing states saw their unemployment rates increase more than the nation's did during the last four years.

Eleven have lower foreclosure rates than the nation, and eight have seen stronger property values than the national average since 2008. And since the end of 2008, eight swing states have watched their economic growth outpace the nation's.

"If the economies in the swing states were doing worse," Sabato said, "I would say Obama would be cooked."

Not all of the numbers are rosy for swing states, and none show a truly healthy economy compared to where they stood before the recession. Only two are adding jobs at a faster rate than are employers nationwide. Using a Federal Reserve index of economic output, only three saw growth pick up at a faster pace than the national average this year.

On one end of the swing-state economic spectrum are two clear stand-outs: Virginia and Iowa.

For Iowa, the latest unemployment rate of 5.2 percent is even lower than Virginia's, and just a point higher than where it was in November 2006. But the standout statistic comes from the housing market.

A home-price index tracked by the Federal Housing Finance Administration shows that nationally, property values dropped 9 percent during the last four years. But alone among the swing states, Iowa actually posted a tiny bit of appreciation since the Obama election: Values are up 1 percent. Experts see hardship coming from the ongoing drought, but for now the housing industry is looking far stronger than the rest of the battleground states.

"We're not seeing a lot of problems with appraisals," said Ken Clark, a Coldwell Banker broker and president of the Des Moines Association of Realtors. "We have a good market. We don't have a great market, but we have a good market."

Far on the other end of the battleground spectrum sit Nevada and Florida, two swing states still suffering the consequences of burst housing bubbles, and whose economies are trailing the national recovery in most categories.

Florida's property values have dropped 16 percent in the last four years, a mere slump compared to Nevada's 33 percent plunge. Florida still suffers from a 12 percent foreclosure rate, more than double Nevada's.

The two states haven't come close to erasing the damage of the recession in terms of economic output. Florida's GDP is down 4 percent compared to 2008, while Nevada's is down 6 percent. No other swing state comes close to such a weak overall performance during Obama's first term.

Job News USA, a company based in Louisville that runs job fairs across the country, recently saw record attendance at a hiring fair near Fort Lauderdale. About 3,200 people crammed into the Signature Grand's banquet hall last month to interview for about 600 openings. "A lot more people are getting desperate in their job search," said Tiffany Price, general sales manager for the South Florida area. "The people five years ago who would turn their noses up at job fairs now are coming out."

Obama leads Romney by an average of 3.5 percent in the national polls, according to a daily summary by Real Clear Politics, and is ahead of Romney in 12 of the 14 swing states analyzed by the Herald. Romney only leads Obama in Missouri and North Carolina, two swing states with economies that are mostly underperforming the others. Still, Obama is five points ahead in Nevada, easily home to the worst performing swing-state economy.

Wisconsin finished near the bottom of the list of swing states in the Herald's economic scoring, but Obama leads there by five points. Analysts expect the Badger State to get more competitive now that Wisconsin congressman Paul Ryan is on the Republican ticket. The economics offer a mixed bag for both campaigns.

Wisconsin's 7 percent unemployment rate is comfortably below the national average, but it has seen some of the weakest job growth among the swing states in the last four years. Payroll employment is down 4.5 percent since November 2008, compared to a 1.4 percent national slide. Property values have dropped 9 percent since Election Day four years ago.

"The economy is struggling really hard," said Steve Lewis, owner of Lewis Construction in Schofield, Wis. "I see empty retail buildings still for lease. They were built in back in '06 or '07. And they still haven't been leased. Not to one tenant. It's just not coming back very strong."

Still, Lewis' commercial business has been having a strong year thanks to its contracts in the energy field. Lewis Construction managed to land contracts tied to Wisconsin's growing "fracking" industry -- which extracts oil and natural gas from rock. It's a practice largely opposed by the Obama administration, and one that Romney is pressing as part of his broader agenda to lower energy costs and grow employment by pursuing more oil production in the United States.

The swing states of Colorado and Ohio also sit in the fracking belt, but Pennsylvania is getting the biggest boost from the relatively new industry, said Tom Jackson, an economist at IHS Global Insight.

"It's really provided a boost to a lot of industries," Jackson said of fracking in the Keystone State. "The steel industry has been building a lot of the equipment, but there is also a lot of technical and professional help you wouldn't think of. Like land title issues, and legal help on mining rights."

For Virginia, it's not fracking but the federal bureaucracy that helped insulate that swing state from the recession. Much of Washington spills over into Northern Virginia, which is home to the Pentagon, the world's largest government office building. A surge in federal spending during the Obama administration has been a help to the state. While Virginia's overall employment is down less than 1 percent since Election Day 2008, the number of federal workers in the state has climbed 9 percent.

Military helps, too, in Virginia, home to the massive Norfolk naval base in the region where Tom Sarach operates his Reliance Staffing. Sarach said his increased sales haven't come from government contractors but a broad base of industries in the private sector -- particularly manufacturing. "It's been a slow upward tick," he said, recalling the dark days in early 2009 when his contracts dropped by nearly 50 percent.

While business is back up, Sarach said he still sees a wounded economy in Virginia. Businesses have been confident enough to request more temporary workers from Reliance but few become permanent hires. One reason Sarach cites: uncertainty over how the Obama administration's healthcare law will impact staffing costs.

"A lot is on hold right now," he said. "Until [Washington] writes the final regulations, there's no way for us to sit down and do calculations on it. We've done some preliminary work, and it's not pretty."

The gap between polls and economic performance shows the complex factors both candidates face as they try to pull a swing state into their column. Demographics and social issues can overcome economic issues, as can the way voters perceive a downturn or a recovery.

Even with pollsters confident the economy remains the top issue for most voters, economics don't determine politics.

North Dakota has the lowest unemployment rate in the nation, 2.9 percent, but Obama has virtually no chance of winning that conservative state. California's 10.7 percent jobless rate -- the third-highest in the country -- still hasn't presented Republicans with a chance of competing in the country's largest state on the presidential level.

But for close contests, analysts see perceptions of the economy playing a large role in swaying the independent voters that will make the difference in November. But even a relatively strong rebound doesn't mean a lock for Obama.

"The question is, in states that are doing well, who do voters credit?" said Quinnipiac University pollster Peter Brown. He pointed to Ohio's healthy rebound, with unemployment lower than it was on Election Day 2008 and a full point under the national average. "Do you credit Barack Obama or do you credit John Kasich?" Brown asked, referring to the state's Republican governor.

The question can be a dicey one for the Romney campaign as it balances criticizing the Obama economy without offending hometown Republican governors touting the rebounds underway in their states. At a Romney rally in St. Augustine, Fla., this week, Florida Gov. Rick Scott had encouraging words for the Sunshine State's rebound, where unemployment is dropping faster than almost every state in the country.

"Even though we have a president that is making it much, much more difficult to do well, in Florida our economy is getting better," Scott said, according to the Associated Press. "Just think what the state could do then if we had the right president."

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