U.S. jobless rate climbs to 7.9 percent; 171,000 jobs added
By Frank Quaratiello and Ira Kantor | The Boston Herald | November 2, 2012
The U.S. unemployment rate rose to 7.9 percent in October as the nation added 171,000 jobs and the presidential candidates were quick to jump on the economic news.
The federal Bureau of Labor Statistics report also revised the number of jobs created in September to add another 34,000, increasing that figure to 148,000. The August jobs number was revised upward to show 192,000 jobs created.
Both President Obama and GOP nominee Mitt Romney found something to shout to the rooftops on the campaign trail today.
In Springfield, Ohio, the president touted the report: “This morning we learned that companies hired more workers in October than at any time in the last eight months. … Our businesses have created nearly five and a half million new jobs. …. The American auto industry is back on top. Home values and housing construction is on the rise. We’re less dependent on foreign oil than any time in 20 years. Because of the service and sacrifice of our brave men and women in uniform, the war in Iraq is over. The war in Afghanistan is ending; al-Qaeda’s been decimated. Osama bin Laden is dead.”
“We have made real progress,” Obama added. “But we are here today because we know we’ve got more work to do. As long as there’s a single American who wants a job and can’t find one, as long as there are families working harder but falling behind, as long as there’s a child anywhere in this country who is languishing in poverty and barred from opportunity, our fight goes on. We’ve got more work to do.”
But the Romney camp was quick to point out the slow rate of recovery.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill. The jobless rate is higher than it was when President Obama took office, and there are still 23 million Americans struggling for work,” said GOP presidential nominee Mitt Romney in a statement. “On Tuesday, America will make a choice between stagnation and prosperity. For four years, President Obama’s policies have crushed America’s middle class. For four years, President Obama has told us that things are getting better and that we’re making progress. For too many American families, those words ring hollow. We can do better. We can have real economic growth, create millions of good-paying jobs, and give middle-class families the security and opportunity they deserve. When I’m president, I’m going to make real changes that lead to a real recovery, so that the next four years are better than the last.”
The October employment report solidified the picture of the U.S. job market that’s emerged this year: Companies are hiring steadily, but cautiously. And unemployment remains high.
“It seems to me if the folks who are working for Gov. Romney were hoping the story this weekend would be the deteriorating U.S. economy and the declining jobs situation, then they’ve got to be disappointed this morning about that,” said Michael Goodman, public policy professor at the University of Massachusetts at Dartmouth. “I don’t think anybody looks at the employment situation in the United States and says, ‘we’re out of the woods,’ but certainly this data and the data over the last couple of years suggests we’ve been slowly and steadily moving in the right direction. … We’re adding jobs; people are returning to the work force. This is a stronger report than I expected. It’s very encouraging.”
Today’s report is the last broad snapshot of the economy before Tuesday’s presidential election. President Barack Obama still faces voters with the highest unemployment rate of any incumbent since Franklin Roosevelt.
In 1976, President Gerald Ford lost to Jimmy Carter when unemployment was 7.8 percent.
Northeastern University economist Alan Clayton-Matthews said the October jobs report, while not terrific, will allow the president to breathe a sigh of relief for now.
“I’m sure there’s that sense of relief and maybe even a bit more. Maybe they can say this shows the economy’s gaining momentum. It’s just not that much of a game-changer,” Clayton-Matthews said. “It’s good news. … It’s consistent with an economy that’s been slowly growing out of this recovery.”
Other economists weren’t so sure.
“(Obama) … has tried to spin it that things are getting better. Personally, I don’t see it at all. It’s a little better than consensus estimates, but it’s still under what we really need to the economy going again. The bottom line is job growth has not been strong. In the whole four years, we’ve had very little overall movement in the unemployment rate,” said Elliot Winer, chief economist for Northeast Economic Analysis Group.
According to David Tuerck, executive director of Suffolk University’s Beacon Hill Institute, the October jobs numbers show that on Election Day, the “Obama jobs gap” will be 4,470,000 — that’s the number of people who continue to be unemployed because of the failure of the economy to catch up to where it stood when President Obama took office in January 2009. When this number is added to the reported level of unemployment, the unemployment rate rises to 10.7 percent, Tuerck said.
But it’s unclear how much political effect any economic report will have. By this point, all but a few voters have made up their minds, particularly about the economy.
“People have given this a lot of thought,” said Andrew Kohut, president of the Pew Research Center. “One report … is unlikely to affect their view of whether Obama has done a good job with the economy or if Romney would do a better job.”
The number of Americans employed part time for economic reasons — often because they cannot find full-time work — fell by 269,000 to 8.3 million in October, according to the BLS report.
The recent drop in unemployment has heartened consumers, who are more confident and spending more. That’s providing much-needed support to the still-weak economy.
The Conference Board said yesterday that its index of consumer confidence surged to 72.2 in October, its highest level since February 2008, two months into the Great Recession.
The index is still below the level of 90 that’s consistent with a healthy economy. But it’s far above its all-time low of 25.3 in February 2009, in the midst of the financial crisis.
Americans are buying more big-ticket items, like cars and appliances. Auto companies reported steady sales gains last month despite losing three days of business to the storm in heavily populated areas of the Northeast.
Yet businesses remain nervous about the economy’s future course. Many are concerned that Congress will fail to reach a budget deal before January. If lawmakers can’t strike an agreement, sharp tax increases and spending cuts will take effect next year and possibly trigger another recession.
American companies are also nervous about the economic outlook overseas. Europe’s financial crisis has pushed much of that region into recession and cut into U.S. exports and corporate profits.
But steady consumer spending is supporting gains in U.S. factory production. The Institute for Supply Management, a private trade group, said manufacturing activity expanded for the second straight month in October.
New orders and production rose, the ISM’s survey found. The increase came mainly in consumer-oriented industries such as furniture, food and beverages, and computers. Demand for machinery, chemical products, steel and other metals fell.
In a rare dose of healthy news for the global economy, China’s manufacturing improved in October, two business surveys showed yesterday. The world’s second-largest economy may be recovering from its deepest slump since the 2008 global crisis.
Analysts expect China’s growth to strengthen this quarter. But they caution that the rebound will be too weak to drive a global recovery without improvement in the United States and Europe.
Herald wire services contributed to this report.