The White House is breathing a bit easier. The president's awful debate performance was bad enough. If it had been followed by a bad jobs report, the president's chances for re-election might have plummeted.
But the report showed September's unemployment rate dropping to 7.8 percent -- the first time it's been under 8 percent in 43 months.
Look more closely, though, and the employment picture is murkier.
According to the separate payroll survey, just 114,000 new jobs were added in September. At least 125,000 are needed per month just to keep up with population growth.
In other words, we're still barely crawling out of the deep crater we fell into in 2008 and 2009. The percentage of the working-age population now working or actively looking for work is higher than it was, but it is still near a 30-year low.
We're better off than we were at the trough of the recession, but evidence is accumulating that the U.S. economy has stalled. It grew at an annualized rate of only 1.3 percent between April and June, according to the most recent data from the Commerce Department. That's down from 2 percent in the first quarter of the year.
Consumer spending rose just one-tenth of a percent in August, after adjusting for inflation. Orders for durable goods (cars, TVs and other long-lasting manufactured products) dropped 13 percent, the biggest monthly drop in three years. And because incomes grew less than spending, the savings rate dropped to 3.7 percent -- the lowest level since April.
Consumers say they're more confident about the future -- and that's a key measure for how they're likely to vote. But the disturbing reality is that paychecks continue to shrink.
Put simply, America is still in the gravitational pull of the Great Recession. That's because consumer spending is 70 percent of economic activity, and the nation's vast middle class still doesn't have enough money to get the economy back on track. (The rich spend a much smaller proportion of their incomes, and their savings go around the world to wherever they can summon the highest return.)
What's more, the rest of the world isn't cooperating: Much of Europe is in recession because it's swallowed the "austerity" Kool-Aid. Japan is still a basket case, and China is slowing considerably.
Former Massachusetts Gov. Mitt Romney says we're not doing well enough, and he's right. But the prescriptions he's offering -- more tax cuts for the rich and for big companies -- would be a disaster. And the cuts he proposes in public investments like education and infrastructure, and safety nets like Medicare and Medicaid, would take money out of the pockets of people who not only desperately need it but whose spending is critically necessary.
Mr. Romney's reverse Robin Hood economics would shrink the middle class even further and put a huge burden on the poor.
But the economic policies Mr. Obama says he'd like to pursue in his second term aren't large or bold enough to do the job.
The median wage has been stuck in neutral for decades. Since the 1980s, almost all the gains from economic growth have gone to the top.
The stagnation of middle-class wages was first masked by millions of women moving into paid work, thereby propping up household incomes. Then it was masked by massive household borrowing against rising home values.
The bubble that burst in 2008 has removed both masks. The economy can't fully recover until the middle class, and the poor who aspire to join it, have enough income to get it moving. For this to happen, they will need a larger share of the gains from economic growth.
Most people assume the recovery will continue, even at a slow pace, and that we'll be back to normal at some point.
But I'm not at all sure. "Normal" is what got us into this mess in the first place.
The concentration of income and wealth at the top has robbed the vast middle class of the purchasing power it needs to generate a full recovery -- something that was masked by borrowing against rising home values but can no longer be denied.
Unless or until this structural problem is dealt with, we won't ever be back to normal. At the very least, if President Obama is re-elected and has a cooperative Congress, he'll have an opportunity to deal with it. If Mr. Romney is elected, he'll make the structural problem worse.
Robert B. Reich, Chancellor's Professor of Public Policy at the University of California and former U.S. Secretary of Labor, is the author of "Beyond Outrage: What has gone wrong with our economy and our democracy, and how to fix it," a Knopf release now out in paperback.