Unemployment Rate Falls to 8.5%, Hiring Surges

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Unemployment rate falls to 8.5 percent, hiring surgesWASHINGTON (AP) - A burst of hiring in December pushed the unemployment rate to its lowest level in nearly three years, giving the economy a boost at the end of 2011.

The Labor Department said Friday that employers added a net 200,000 jobs last month and the unemployment rate fell to 8.5 percent, the lowest since February 2009. The rate has dropped for four straight months.

The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006.

"There is no question that today's employment report is a positive and there is also no question that the pace of job growth has accelerated of late," said Dan Greenhaus, an analyst at BTIG LLC, a brokerage firm

A better job market is a positive sign for President Barack Obama, who is bound to face voters with the highest unemployment rate of any sitting president since World War II. Unemployment was 7.8 percent when Obama took office in January 2009.

Still, the level may matter less to his re-election chances if the rate continues to fall. History suggests that presidents' re-election prospects hinge less on the unemployment rate itself than on the rate's direction during the year or two before Election Day.

For all of 2011, the economy added 1.6 million jobs, better than the 940,000 added in 2010. The unemployment rate averaged 8.9 percent last year, down from 9.6 percent the previous year.

Economists forecast that the job gains will top 2.1 million this year.

The December report painted a picture of a broadly improving job market. Average hourly pay rose, providing consumers with more income to spend. The average work week lengthened, a sign that business is picking up and companies may soon need more workers.

And hiring increased across most major industries.

Manufacturing added 23,000 jobs, as did the health care industry. Transportation and warehousing added 50,000 jobs. Retailers added 28,000 jobs. Even the beleaguered construction industry added 17,000 workers.

Economists cautioned that some of the gains reflected temporary hiring for the holiday season. The government adjusts the figures to account for those seasonal factors, but doesn't always fully account for them.

The gains in transportation and warehousing, for example, reflected a strong increase in hiring for couriers and messengers. That could stem from a big jump in online shopping over the holidays, the department said.

The nation's work force, which includes both people working and those searching for jobs, shrank slightly last months and is little changed from this spring. That's a concern because a strengthening job market normally draws more applicants.

The work force has declined by about 160,000 over the past two months, one reason the unemployment rate has fallen.

"You have to take that unemployment rate decline with a grain of salt when you look at the declines in the labor force," said Marisa DiNatale, an economist at Moody's Analytics.

The government only counts people as unemployed if they are actively searching for jobs. Discouraged workers who have given up on looking are not included in the rate.

And some of those who are counted as employed are working part time, but want full-time work.

When including those groups, the broader "underemployment" rate was 15.2 percent. That's down from 15.6 percent the previous month, but still high. The figure has dropped for three straight months.

And the job market has a long way to go to recover from the Great Recession. The nation has 6 million fewer jobs that it did in December 2007, when the recession began.

More jobs and higher pay are crucial to helping the economy grow. They could enable shoppers to increase spending, which fuels 70 percent of economic activity.

The economy likely grew at an annual rate of above 3 percent, a healthy pace.

A more robust hiring market coincides with other positive data that show the economy ended the year with some momentum.

Weekly applications for unemployment benefits have fallen to levels last seen more than three years ago. Holiday sales were solid. And November and December were the strongest months of 2011 for U.S. auto sales.

Many businesses say they are ready to step up hiring in early 2012 after seeing stronger consumer confidence and greater demand for their products.

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23 Comments

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billyjoeobama

America's unemployment rate will go down when Obanana is unemployed.

January 09 2012 at 9:45 AM Report abuse +3 rate up rate down Reply
marine1942

True article as there were twice as many workers at Burger King this a.m.

January 09 2012 at 9:11 AM Report abuse +2 rate up rate down Reply
1 reply to marine1942's comment
billyjoeobama

That's because they closed the other location down the street from there.

January 09 2012 at 9:29 AM Report abuse +2 rate up rate down Reply
scottee

Ready for a new year and another bout with the Internal Revenue Service, deductions, exemptions, pens and pencils, calculators, receipts, 1040s, W-2s, accountants, Quicken, TurboTax, and more? If you're like most Americans, that laundry list of income tax jargon, paraphernalia, professionals and their fees is enough to set your head spinning -- and even if it isn't, the thought of paying Uncle Sam your annual dues will certainly do the trick.

America's tax code needs reform, plain and simple. The current tax system discourages saving, investment, and entrepreneurship. It's a drag on productivity, job growth, international competitiveness, and wages. It's complicated beyond belief, and it needs to change. The good news is that there's a solution that would spell the end of America's convoluted tax code once and for all: The Heritage Foundation's "New Flat Tax." It's as easy as one, two, three. demand it from your reps in washington.

January 09 2012 at 8:31 AM Report abuse rate up rate down Reply
Samir semaan

The unemployment rate dropped could be due to seasonal holiday shopping or could be a trend that the economy is improving after 4 years of recession since 2007 till the end of 2011 which mark the 4 years still no analyst could suggest that we are out of recession because if history suggest no one know when Ronald Reagan face his reelection bid in 1984 that he will go on winning the election because the economy improve suddenly. But there is a lot of work to be done which is signinig those trade agreements and fix the budget and lower the deficit and deal with raising the retirement age for social security and announce the end of Government intervention and social programs till enforcement take place.These actions only a president can make decisions about it . That will lower the deficit and build revenues for the Federal government so it can be used for infrastructure programs to hire more workers.

January 08 2012 at 10:31 AM Report abuse rate up rate down Reply
hgeorgech

Gosh, do ya think maybe the unemployment numbers dropped a bit in December may be due, in part, to part-time, seasonal jobs that will disappear in January? The Feb/Mar numbers will be more meaningful!

Truth be known, there's more people employed than one might imagine .. look around you at the folks working "off the books" .. for ca$h ... and who can blame 'em? They don't show up on the gov't figures as employed or unemployed .. but they're there!

January 08 2012 at 8:02 AM Report abuse +3 rate up rate down Reply
1 reply to hgeorgech's comment
pgile

Sure -- those 23,000 seasonal manufacturing jobs -- maybe helping Santa build toys. And the the 17,000 seasonal construction jobs - maybe constructing Christmas decorations. And how about the 23,000 new jobs in the health care industry? Why, taking care of drunks on Yew Year's Eve of course. And the 50,000 in transportation and warehousing -- obviously people driving everyone to grandma's house and home again. All to be laid off now that the holidays are over.

Gosh, do ya think this is a dumb argument to keep repeating. Don't suppose you've bothered to check the unemployment rate for past January's. Over the past decade it's come down as often as gone up, and most often stayed the same. But, please, don't let facts get in the way of your thinking.

January 08 2012 at 10:26 AM Report abuse +1 rate up rate down Reply
rdakm

LMAO @ THE DEM SPIN...NICE TRY......... THIS IS TOO FUNNY

January 07 2012 at 1:40 PM Report abuse +4 rate up rate down Reply
frankie

What a joke! The real unemployment rate is over 15%. This is all political spin for Obama's re-election.

January 07 2012 at 11:12 AM Report abuse +4 rate up rate down Reply
1 reply to frankie's comment
Mickylitz

frankie ,,,,The Liberals have NO problem lying about their so called exploits simply to continue to fool the public and get them to vote them back in to defeat capitalism which made this country so great and to install communism which wil give them total control of the population, I have a lot of problems with our citizens being so easily snuckered and continue to do so after seing the absolute disaster the democrats have made of this country.

January 07 2012 at 11:39 AM Report abuse +3 rate up rate down Reply
granaryst

By the time we pay school taxes, county taxes, city taxes, state taxes, sales taxes, federal income taxes, social security taxes, medicare taxes, gasoline taxes, alcohol taxes, tobacco taxes, driver license taxes, vehicle taxes and probably a dozen other hidden taxes and fees, we don't pay too little in taxes. Our government is spending too much and you idiots are enabling them to continue to do so...

January 07 2012 at 10:11 AM Report abuse +7 rate up rate down Reply
kngathr

Idea- Remember the idea about repatriating profits from overseas? Remember the 100 Billion dollar injection to the SBA? My idea is to shove that liquidity away from random spending on other issues or pet projects and put it right in the hands of people dealing with Americans in need of startup capital. Think about it as the loan the banks can’t or won’t give. Think of it as the push that ideas need to become entities, before they can qualify for large venture capital (and all the associated strings that come with VC). Think about it as a way to renew hope in the dream of American capitalism.

Side note- With 100 Billion of new money injected, it would create 500,000 new businesses (assuming a startup loan of $200,000 on average). That would immediately employ 500,000 people as owners and assuming history repeats itself- they would employ approximately 4 additional people per business (historical average). The net gain for this 100 Billion of New Business injection would result in approximately 2.5 million new jobs in America.

New businesses get people off unemployment. New businesses hire about 4 people over the first couple years on average. New businesses buy things from existing businesses. New businesses pay taxes. New businesses are the engine of our economy.

New businesses become the ultimate solution for the ultimate problem- JOBS in America.


More Ideas at FixTheNation.com

January 07 2012 at 8:40 AM Report abuse rate up rate down Reply
Firefly Tech

This was Christmas rush hiring. They all will be layed off soon. Its seasonal and not President 0 doing!

January 07 2012 at 1:16 AM Report abuse +3 rate up rate down Reply