Rise in Jobs May Boost Obama Message on Recovering U.S. Economy
A surge in new jobs last month improves President Barack Obama’s position on the overriding concern of voters this year, even as slower progress in other economic measures still drags on his re-election chances.
“Unemployment is still high, but with the job creation numbers being well in excess of what’s expected, this is an unabashed victory for the president and ratifies” his policies, said Doug Schoen, a Democratic strategist who was a pollster for former President Bill Clinton.
Employers added 243,000 jobs in January, the biggest gain in nine months, and the unemployment rate dropped to 8.3 percent from 8.5 percent in December, the Labor Department reported today in Washington. The improvement exceeded the most optimistic forecasts in a Bloomberg News survey of economists.
Obama and administration officials offered a calibrated public response, with nine months to go before the November election and the U.S. economy still vulnerable to risks such as a worsening of the European debt crisis.
Obama said that while too many people in the U.S. still don’t have jobs, the data show “the economy is growing stronger” and “the recovery is speeding up.” In remarks in the Washington suburb of Arlington, Virginia, Obama appealed to Congress to pass an extension of the payroll tax cut for workers and unemployment benefits.
“Do not slow down the recovery that we’re on,” Obama said, directing his words at lawmakers. “Don’t muck it up.”
Former Massachusetts Governor Mitt Romney, the Republican presidential front-runner, called the decline in the jobless rate “good news” while criticizing Obama.
“It has taken a lot longer than it should have to come back, in part because of the policies of this administration,” Romney said as he campaigned in Nevada, where the next round in the Republican nomination contest takes place tomorrow.
The economy’s 2.8 percent growth rate in the final quarter of last year was only slightly above the minimum expansion rate most economists say is needed to bring down unemployment. A slowdown might reverse the jobs gains.
The nation experienced just such a scenario last year, when progress on joblessness reversed following a surge in oil prices, supply chain disruptions from the tsunami in Japan and market concern over European debt.
Even if job growth continues, the headline unemployment rate that dominates the political debate on the economy may rise. That would happen if workers who had given up looking for a job, and so are no longer included in the data, resume seeking employment.
Today’s employment report underscored that risk. The portion of the population counted as participating in the workforce declined in January to 63.7 percent from 64.0 percent in December. In December 2007, at the start of the recession, 66.0 percent of the population held jobs or were actively seeking employment.
Obama, in his State of the Union address last month, presented re-election themes that de-emphasize the need for a speedy recovery. Instead, he stressed fostering durable growth through an economy “built to last” and a “fair shot” for the middle class.
Only one U.S. president since World War II -- Ronald Reagan -- has been re-elected with a jobless rate above 6 percent. Reagan won a second term in 1984 with 7.2 percent unemployment on Election Day, after the rate had fallen almost three percentage points in the previous 18 months.
The Labor Department data released today showed employers added jobs in a broad range of industries, including manufacturing and construction as well as temporary help agencies, accounting firms, restaurants and retailers.
“The economy’s above stall speed now,” said Gus Faucher, senior economist at PNC (PNC) Bank in Pittsburgh. “It’s got that momentum going where you’re going to have job growth generating spending gains, generating job growth.”
The Standard & Poor’s 500 Index rose 1.4 percent to 1,344.0 at 12:45 p.m. in New York, extending the best start to the year since 1989. The yield on the benchmark 10-year Treasury note climbed to 1.94 percent from 1.82 percent late yesterday.
Still, long-range forecasts suggest that the recovery still may be slow.
Fed Chairman Ben S. Bernanke told Congress yesterday that while the labor market has “improved modestly” over the past year, the long-term unemployment picture is “particularly troubling.”
The Fed forecast an unemployment rate of 8.2 to 8.5 percent in 2012, falling to 6.7 to 7.6 percent by the fourth quarter of 2014, according to its Jan. 25 forecast.
‘Long Way to Go’
“We still have a long way to go before the labor market can be said to be operating normally,” Bernanke told the House Budget Committee.
The nonpartisan Congressional Budget Office issued a more pessimistic forecast on Jan. 31, projecting unemployment may rise to 8.9 percent in the last three months of this year, which includes Election Day, and increase to 9.2 percent in the last quarter of 2013.
“We have not had a period of such persistently high unemployment in this country since the Depression,” Douglas W. Elmendorf, director of agency, said at a news conference.
To contact the editor responsible for this story: Steven Komarow at firstname.lastname@example.org
Bloomberg moderates all comments. Comments that are abusive or off-topic will not be posted to the site. Excessively long comments may be moderated as well. Bloomberg cannot facilitate requests to remove comments or explain individual moderation decisions.