Unemployment rate drops as economy slowly improves
The unemployment rate in the U.S. fell in November to its lowest it more than two years. Thousands of jobs were added last month as the economy continued to improve at a snail’s pace. Still, analysts are urging caution against too much optimism.
According to the Labor Department, the unemployment rate dropped from 9 percent to 8.6 percent in November. That is its lowest since March 2009.
The private sector added 140,000 jobs. At the same time, 20,000 government jobs were eliminated, for an aggregate of 120,000. But 13.3 million U.S. adults still remain unemployed.
Other growth indicators
Retailers reported a strong holiday sales weekend at the end of November. Car sales rose sharply during the same month, and the manufacturing sector shipped more units than it has in previous months. Consumer confidence is also on the rise.
Growth is slow
According to economist Paul Ashworth of Capital Economics, the economy will improve another 2.5 percent during the last quarter of the year. However, he warns that it may slow to around 1.5 percent in 2012 because of the worsening economic crisis in Europe.
While retailers added 50,000 more jobs and restaurants and bars brought in 33,000 more employees, many of the new hires are temporary holiday workers. And 315,000 people gave up looking for work and so are no longer counted among the unemployed.
Heidi Shierholz, an economist at the Economic Policy Institute, said:
“When unemployment is this high for this long, it’s very likely that most of the people dropping out are doing so because they can’t find work. There is some movement here, that’s true. But it’s just so slow.”
The slow job growth means that employers do not need to raise wages as employee incentives. That leaves workers with less money to spend in the troubled economy and further slows growth.
Republicans blame administration
Republicans maintain that the slow growth indicates that the president’s policies have failed. House Speaker John Boehner said in a statement:
“Any job creation is welcome news, but the jobless rate in this country is still unacceptable. As you may remember, the Obama administration promised unemployment would stay below 8 percent if its stimulus was enacted. That promise has gone unfulfilled.”
Boehner went on to urge the Senate to pass its many bills aimed at limiting government interference in business.
Democrats push Jobs Bill
Alan Krueger, chairman of the president’s Council of Economic Advisers, wrote of the Labor Department report:
“[It] provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but the pace of improvement is still not fast enough given the large job losses from the recession that began in December 2007.”
The Obama Administration maintains that futher stimulus, like its proposed Jobs Act, is needed.