Unemployment Falls to 8.5%, Lowest Level in Almost 3 Years, as 200,000 Jobs Are Created
FlaglerLive | January 6, 2012
The national unemployment rate fell to its lowest level in almost three years in December–going back to February 20009, when it was 8.3 percent–as the economy added 200,000 and the number of unemployed fell to 13.1 million, all signs pointing to an economy finally strengthening past anemia.
The number of jobs in November was revised to 120,000, a 20,000 increase, although the number for October was revised downward by 20,000. Fears of a second recession, rife in summer, have now passed. The figures are also a boon to President Obama’s reelection prospects, which dim if the unemployment rate remains high just as they brighten considerably if the rate continues to fall, particularly if it falls below 8 percent.
For the first time since the economic downturn–at least in significant numbers–the decline in unemployment was the result of actual job creation, rather than a reduction in labor force participation or people dropping off the unemployment rolls. Job creation in the last 12 months–1.9 million–is the highest for a 12-month period since 2005.
“Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression,” Alan B. Krueger, chairman of the White House Council of Economic Advisers, said in a statement this morning. “It is critical that we continue the economic policies that are helping us to dig our way out of the deep hole that was caused by the recession that began at the end of 2007.”
Mitt Romney, the leading contender for the GOP presidential nomination, ridiculed the White House’s conclusions this morning. “This president doesn’t understand how the economy works,” he said. “It’s time to get a president who does.”
Twice before since the 2008 economic crisis the economy appeared to pick up only to lose job gains a few months later. Two factors may yet cripple this latest attempt at recovery: first, Europe will almost certainly fall into recession this year (France is already in one), creating a drag on the American economy as exports to Europe fall and European tourism, especially to Florida, a favorite destination for Europeans, lessens. Second, the temporary payroll tax cut and extended unemployment insurance are both set to expire at the end of February, if Congress doesn’t act. Both those measures put billions of dollars into ordinary consumers’ hands, powering the economy. Their elimination would shave several decimal points off the economy’s growth rate.