December 2, 2011 in Business, Nation/World

U.S. unemployment rate drops to 8.6 percent

Christopher S. Rugaber Associated Press

WASHINGTON (AP) — Small businesses and startups that were skittish about the economy this summer started hiring in bigger numbers this fall, helping drive the unemployment rate down to 8.6 percent in November, the lowest in two and a half years.

The country added 120,000 jobs last month, the Labor Department said Friday. The economy has generated 100,000 or more jobs five months in a row — the first time that has happened since April 2006, long before the Great Recession set in.

“Something good is stirring in the U.S. economy,” Ian Shepherdson, an economist at High Frequency Economics, said in a note to clients.

The unemployment report, one of the most closely watched economic indicators, showed that September and October were stronger months than first estimated. For four months in a row, the government has revised job growth figures higher.

Unemployment was 9 percent in October and has been stuck near or above that level for two and a half years. The last time unemployment was this low was March 2009, two months after President Barack Obama took office.

The government uses a survey of mostly large companies and government agencies to determine how many jobs were added or lost each month. It uses a separate survey of households to determine the unemployment rate.

The household survey picks up hiring by companies of all sizes, including small businesses and startups. It has shown an average of 321,000 jobs created per month since July, compared with an average of 13,000 the first seven months of the year.

“We might finally be seeing new business creation expand again, which is critical to the sustainability of the recovery,” said Diane Swonk, chief economist at Mesirow Financial, a financial services company.

When the economy is improving or slipping into recession, many economists say, the household survey does the better job of picking up the shift because it is more likely to detect small business hiring.

The unemployment report was the latest encouraging indicator for the economy. Other reports this week have shown that factories are producing more, construction is growing, and people are buying more cars.

And Americans spent a record $52.4 billion over the Thanksgiving weekend, according to the National Retail Federation, a trade group. A separate report from MasterCard found spending was up almost 9 percent from last year.

The accelerating debt crisis in Europe has loomed over the economy for months. An economic collapse there would hammer sales of American exports. And if the crisis causes banks to stop lending money, the world economy would suffer.

But there are signs that Europe is moving toward a solution. Earlier this week, six central banks around the world made it easier for commercial banks to borrow American dollars to do business, calming financial markets and buying time for politicians to work something out.

The leaders of Germany and France appear to be pushing for stronger rules to make sure European governments are responsible with their budgets, an approach designed to save the euro currency from collapse.

European leaders meet next Friday for a crucial summit on the matter.

In the United States, about 13.3 million people are counted as unemployed. Private employers added 140,000 jobs in November, while governments shed 20,000. Governments at all level have cut almost a half-million jobs this year.

More than half the jobs added last month were by retailers, restaurants and bars. Professional and business services also rose. Those tend to be higher-paying jobs — engineers, accountants and high-tech workers.

Still, more than 300,000 people stopped their job searches last month, so they were no longer officially counted as unemployed. That accounts for some of the drop in the unemployment rate.

Even with the recent gains, the economy isn’t close to replacing the jobs lost in the recession. Employers began shedding workers in February 2008 and cut nearly 8.7 million jobs for the next 25 months. The economy has regained about 2.5 million.

It had appeared that Obama would face voters next fall with the highest unemployment of any sitting president seeking re-election since World War II. That was the 7.8 percent faced by Gerald Ford when he ran and lost in 1976.

But the 8.6 percent figure makes it more likely that unemployment will fall below that level by next November. That would take stronger and consistent job growth. It takes about 125,000 new jobs a month just to keep up with population growth.

Ronald Reagan faced 7.2 percent unemployment in 1984 and trounced Walter Mondale. Unemployment was 7.8 percent when Obama took office in January 2009.

The economy grew at a 2 percent annual rate in July, August and September. Paul Ashworth, an economist at Capital Economics, estimates growth will speed up to 2.5 percent in the last three months of the year, but slow to 1.5 percent in 2012.

One factor that will figure in is whether Congress extends the Social Security tax cut, which is set to expire Dec. 31. It will give most American households $1,000 to $2,000 extra this year.

Both Democrats and Republicans have expressed interest in extending the tax cut — Obama wants to expand it — but they have disagreed over how to pay for it. The Senate on Thursday defeated plans from both parties on how to do it.

Republicans had proposed paying for the cut by freezing the pay of federal workers through 2015. Obama has already recommended freezing it through 2013. Democrats wanted to raise taxes on people making $1 million or more a year.

25 comments on this story so far. Add yours!

Bruce (aka thatoneguy) on December 02 at 8:49 a.m.
(a) This is a lie to help Adolf Hussein Obama get re-elected.
(b) Republicans created those jobs.
(c) I forgot the 3rd thing.
oneanddone on December 02 at 8:52 a.m.
The disgusting aspect of this news will be the spin from each side. There can be no joy allowed.
valleyman on December 02 at 9:02 a.m.
Does anyone really believe this? Are you neighbors really back to work? Are home foreclosures really down? What will we be told to believe next?
Scoutster on December 02 at 9:16 a.m.
The unemployment rate, like the DJIA, is no more a measure of economic health than checkin’ the change in your pocket.
It’s like taking somone’s pulse and deciding they don’t have cancer.
Our long-term unemployment problem (yes, it will last at least 5 years, no matter who is president or who runs Congress) is distorted by sound byte policy making.
People want to win, not to lead.
Bruce (aka thatoneguy) on December 02 at 9:18 a.m.
Thanks for the reminder, oneanddone — the 3rd thing was “whatever the other side says about this is a lie. Vote for us, not them!”
schleufer on December 02 at 9:49 a.m.
how can the republicans take credit for anything when all they ever did was vote no. speaking of that maybe they can explain why they take orders from someone not elected.
http://www.cbsnews.com/8301-18560_162-57327816/grover-norquist/?tag=currentVideoInfo;videoMetaInfo
instead of slamming obama maybe they need to do that and come clean on the insider trading like when did they know why didnt they do anything about it and have they ever made money or deals from it.
de3 on December 02 at 10:08 a.m.
A friend emailed me this quote from another news report this morning - “And a key reason the unemployment rate fell so much was because roughly 315,000 people had given up looking for work and were no longer counted as unemployed.”
Unemployment went down mostly because a lot of people gave up looking for work, not because lots more people have jobs. .
liberal_in_right_wing_land on December 02 at 10:12 a.m.
Of course the typical tea baggers on here are saying because the unemployment rate drops Obama has nothing to do with it, but of course when the unemployment rate goes up that is all because of Obama.
Anything bad that happens its because of Obama, anything good that happens its because of the republicans…..right tea baggers? Stupid Idiots, probably could’t even get dressed in the morning without your mommies.
Hunterman on December 02 at 10:16 a.m.
For the republicans in congress so desperately trying to keep the economy down to keep Obama from being re-elected this has got to hurt.
pmbrown49 on December 02 at 10:20 a.m.
Sorry, but 120,000 new jobs doesn’t lower the US unemployment rate by 4/10ths of a percent. That would mean only 30 million people (about 11% of the population) have a job and we know that’s not true.
There are alot of people not drawing unemployment any longer and have just quit looking for work that aren’t included in the 8.6%. “Real” unemployment is double that and I haven’t even addressed the UNDER-employed. Blame whomever you want (Obama, Bush, Hitler, Stalin, etc.), but those are the facts.
RedCedar on December 02 at 11:01 a.m.
The freeways and the mall parking lots are jammed with new cars. “Black Friday” set another sales record. It does not look like a recession to me. Add to that the fact that fat geese are still wandering around city parks unafraid, and I think the bottom line is that a lot of people don’t have the jobs they’d like to have or the jobs they used to have, but it’s easy to get by on the dole these days (name your dole, there are plenty), and all in all things are pretty good. I don’t remember the soup lines of the Great Depression, but I remember the “Boeing recession” very well in Seattle when most small businesses put signs in their windows saying “Not hiring”, and there really were PhDs pumping gas. We’re not there today.
On the other hand, I agree that the unemployment numbers are contrived since they leave out those who have given up looking, rather like the way the inflation numbers leave out food and energy, the two things that have gone up in price the most.
Dazzeetrader1980 on December 02 at 11:24 a.m.
Red…all that means is that people are spending money on things they don’t need and cannot pay for on credit they don’t have. Malls being jammed do not matter.
And the unemployment drop means just this: Few are loooking…and they won’t be looking for jobs that aren’t there.
Obama knows that. Look around you people…there are no new jobs….
Finally , where are those jobs? People are using food stamps in record numbers and Obama’s entending unemployment…why would they work? They faded away…..and they won’t be getting jobs anytime soon. There is NO possible way, a jobs gain oif 120 K will ever lower unemployment figures…it just doesn’t add up.
No good news here. It’s just for Obama’s re-election. Season jobs for th eHolidays don’t matter wither. He’s lieing again.,
Boot this joke of a president.
DickAdams on December 02 at 11:25 a.m.
schleufer: You say, “instead of slamming obama maybe they need to do that and come clean on the insider trading like when did they know why didnt they do anything about it and have they ever made money or deals from it.”
I suppose except for Pelosi, who benefited from insider trading, none of the other democrats would think of cheating by using insider trading information that everybody in congress knew about. LOL
schleufer on December 02 at 11:26 a.m.
i been doing some thinking about the condition of this country and now with lean manufacturing and the idea of someone with a high school diploma can forget about working their way up the ladder like they used to. now if you dont have a college degree you get a mop for the rest of your life. then the other nite i saw an episode of campus PD. yeah there were our brightest and privliged and more than likely those who would be burdend with loans decades to come staggering out in the streets pants half way down screaming to the top of their lungs and the cops trying to get them handcuffed and off to jail before they puke all over the back of the patrol car.
yeah those are our future corporate leaders. they will continue to steer us into the ditch and then demand millions in bonuses to stay on thru the companies bankruptsy or else! our courts will continue allowing tens of millions in bonuses for the privlege of keeping them so they can terminate the pensions of those who really get their hands dirty trying to build a future.
there is nothing like spending decades at your job only to have some college educated idiot to come along and tell you how its done. personally id take experience and common sense any day.
schleufer on December 02 at 11:45 a.m.
as a matter of fact i have called some dems and nobody so far is putting it on their web sites. not even who came up with it when they did and who voted for it.
now back to campus PD. here are a few clips of our furure leaders.
http://www.hulu.com/campus-pd
drywitt99 on December 02 at 11:47 a.m.
??????
Unemployment goes up…….Obama’s fault.
Unemployment goes down…….Obama receives no credit.
WELCOME TO TEABAGGER WORLD!!!
TEABAGGERS……..WELCOME TO THE SECOND OBAMA ADMINISTRATION!!!!!
johnclarke on December 02 at 11:51 a.m.
DickAdams on December 02 at 11:25 a.m.
I suppose except for Pelosi, who benefited from insider trading, none of the other democrats would think of cheating by using insider trading information that everybody in congress knew about. LOL
Now Dick, be fair.
http://www.upi.com/Top_News/US/2011/11/14/CBS-Insider-trading-OK-for-Congress/UPI-41471321263000/
First of all, that was legal. Completely unethical and slimy, but legal at the time. Oh, and you might also mention that that guy standing next to her did that same thing. I guess we should also mention that once Pelosi and Boehner were caught doing this, suddenly they wanted to ban it :)
thatoneguy (Bruce) on December 02 at 8:49 a.m.
(a) This is a lie to help Adolf Hussein Obama get re-elected.
(b) Republicans created those jobs.
(c) I forgot the 3rd thing
It’s “tax cuts create jobs”
Shadedmuse on December 02 at 12:03 p.m.
Ression over, I know this Because I finnaly got a job on Nov 21, after being out of work for 3 and half years. it was like a paid vacation. of posting on SR and bashing trashing Spokant.
johnclarke on December 02 at 12:59 p.m.
Way to go shadedmuse !
Bruce (aka thatoneguy) on December 02 at 4:17 p.m.
Congrats shaded!
DickAdams on December 02 at 7:16 p.m.
I forgot to mention, 356 legislators used the insider trading info and cleaned up making out like a bandit. Obviously, IMO, both parties were guilty of short changing the innocent retirement fund plans and a huge number of citizens got the shaft, i. e. for those who follow the stock market and know what`s going on. When I mention retirement funds, more public employee funding than those in the private sector plans got hit. Its easy to check out the numbers if a person is so inclined. Its up to those citizens who want the truth to check it out for themselves. Before and after trading markets should be eliminated but the fat cats prevent the change when their trading would be confined to the 7 1/2 hours in the regular trading day. That way its open to anyone that wants to trade during the regular trading day.
Dazzeetrader1980 on December 02 at 8:55 p.m.
http://www.reuters.com/article/2011/12/01/us-usa-economy-instant-idUSTRE7B018820111201
You liberals are SO SO SO gullible:(
Dazzeetrader1980 on December 02 at 9:00 p.m.
SOOOOOOOO gullible:
Read carefully…315 thousand have left the workforce, Nothing to cheer about.
http://www.bloomberg.com/news/2011-12-02/u-s-jobless-rate-unexpectedly-declines-to-8-6-payrolls-rise-by-120-000.html
It’s Obama’s playground and you libs are helping him dismantle the US/…I thought Americans were smarter than this…..Obama’s playground…and his newly announced 17 day vacay should convince you …
He lies and you think he’s having a bad day…fully unwilling to admit he’s a simple liar who must lie or he’ll be noted to be incompetent.
Bruce (aka thatoneguy) on December 02 at 11:01 p.m.
From the article:
“Still, more than 300,000 people stopped their job searches last month, so they were no longer officially counted as unemployed. That accounts for some of the drop in the unemployment rate. ”
Dazzeetrader1980 on December 03 at 2:39 a.m.
Fake figures Bruce…the economy would have to add 625 000 jobs in the past month for the unemployment rate to drop so precipitously.
Somehow, Obama’s got the number out there and the media is, as usual, not questioning it. Don’t expect honesty in an election campaign…not from this president anyway. He’s so stupid about the economy, he likely doesn’t know what defines unemployment.