Jobless Rate Drops to 4-Year Low, Boosts Team Obama

Friday, 05 Oct 2012 09:00 AM

By Newsmax Wires

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The U.S. unemployment rate dropped to a near four-year low of 7.8 percent in September, a potential boost to President Barack Obama's re-election bid.

The Labor Department said on Friday the unemployment rate, a key focus in the race for the White House, dropped by 0.3 percentage point to its lowest point since January 2009.

A survey of households from which the jobless rate is derived showed 873,000 job gains last month, the most since June 1983. The drop in unemployment came even as Americans come back into the labor force to resume the hunt for work. The workforce had shrank in the prior two months.

The household survey is volatile. A survey of business establishments showed employers added 114,000 jobs to their payrolls last month, a touch above economists' expectations for 113,000 jobs. Employment for July and August was revised to show 86,000 more jobs created than previous reported.

It was the second last report before the Nov. 6 election that pits Obama against Republican Mitt Romney.

A Reuters/Ipsos poll released on Thursday after Wednesday's first presidential debate showed Romney gained ground and is now viewed positively by 51 percent of voters. Obama's favorability rating remained unchanged at 56 percent.

A recent Associated Press-GfK poll found that the vast majority of voters already have settled on a candidate, but 17 percent of likely voters are considered persuadable — either because they're undecided or showing soft support for Obama or Romney. Roughly 56 percent of persuadables approve of the way Obama is handling his job as president, but fewer, 47 percent, approve of his handling of the economy.

While employers are hiring in this economy, the pace has been far too slow to reduce unemployment in recent months. Still, while the slow recovery has been a drag on Obama's re-election hopes, the monthly reminders of joblessness have not markedly altered the trajectory of the presidential campaign.

Last month's weak hiring numbers for instance came out just a day after Obama delivered his acceptance speech at the Democratic National Convention. Yet they didn't appear to interfere with Obama's post-convention bounce in public opinion polls or with perceptions that he would be as good as Romney at creating jobs.

The unemployment rate has been fluctuating between 8.1 percent and 8.3 percent since January after being stuck at between 8.9 percent and 9.1 percent for 10 months in 2011.

On average, the economy has added just 87,400 jobs a month since April. That's down from an average of 226,000 jobs a month in the January-March quarter. In an indicator that typically is higher than the government's figures, payroll processor ADP said Wednesday that private employers added 162,000 jobs last month, exceeding economists' estimates.

Romney will certainly use Friday's report to cast Obama as ineffective in job creation. Speaking in Denver on Thursday morning, Romney said Obama would raise taxes on small businesses "which will kill jobs."

"I instead want to keep taxes down on small business so we can create jobs," Romney added. "This is about good jobs for the American people."

At his own Denver rally Thursday, Obama countered that Romney offered the same economic remedies of the past. "We cannot afford to double down on the same top-down economic policies that got us into this mess. That is not a plan to create jobs."

No president has been re-elected with unemployment above 8 percent since the Great Depression. But analysts and Obama advisers maintain that the rate is less important than the trajectory, and Obama aides are quick to note that the past recession drove unemployment up to 10 percent in 2009 before beginning to drop.

"I think that there's a broad recognition of where we are," Obama campaign senior political adviser David Axelrod said. "So unless they're startlingly different, I don't think that this particular jobs report is going to be determinative. That's been the pattern. People understand we're in a long-term project here and we have to keep moving forward."

But the jobless numbers, the most attention-grabbing economic data point, also doesn't exist in a vacuum. Other indicators, taken together, present a mixed economic recovery that is trending positive.

Consumer confidence grew last month. Average rates on fixed mortgages fell to record lows for the second straight week and mortgage applications climbed 16.6 percent last week, according to the Mortgage Bankers Association. Still, underscoring the mixed picture, the Commerce Department said Thursday that factory orders fell 5.2 percent in August, the biggest drop in more than three years.

Last week, the Obama administration got some good news when the Labor Department reported that the economy added 386,000 more jobs than had previously been estimated in the 12 months ended in March. The revision officially put job creation under Obama's presidency in the black, with more jobs in the U.S. now than when he took office.

Alos, economists blame the so-called fiscal cliff for the slowdown in business hiring, which has left millions of Americans working either part-time or unemployed and too discouraged to look for jobs.

The Congressional Budget Office has warned that a failure by Congress to avoid the automatic tax hikes and government spending cuts that will suck about $600 billion out of the economy next year would knock the economy back into recession.

"Businesses are not hiring people, they want to wait and see how the election evolves and how the political landscape shapes up," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California.

"Everyone has kind of battened down the hatches," Sohn said before the release of the report.

Persistently poor labor market conditions led the Federal Reserve in September to announce a plan to buy $40 billion worth of mortgage-backed securities each month until it sees a sustained turnaround in employment.

The central bank, which also pledged to keep overnight lending rates near zero until at least mid-2015, hopes the purchases drive down long-term borrowing costs and spur the recovery.

The Fed's ultra-easy stance has started to free up credit, giving a lift to consumers, economists said. That, in turn, helped lift retail hiring in September.

Temporary help jobs, which are often seen as a harbinger for permanent hiring, fell 2,000 after being almost flat in August.

Manufacturing payrolls fell for a second straight month.

Construction employment rose 5,000, benefiting from the rise in home construction, as demand for housing rises against the backdrop of record low mortgage rates

Government payrolls rose 10,000 after increasing 45,000 in August. Average hourly earnings rose 7 cents last month, which could support spending.

Information from the Associated Press and Reuters was used in this report.

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