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Jobless rate up to 9.8 percent as economy adds only 39,000 jobs
The jobless rate rose to 9.8 percent in November as the economy added a disappointing 39,000 jobs, the Bureau of Labor Statistics reported Friday.
Forecasters had expected the economy to add as many as 150,000 jobs, and the November numbers are a steep fall from a month before, when the economy added 172,000 jobs.
The weak report suggests the labor market remains fragile and comes as the White House and congressional Republicans negotiate a deal to temporarily extend all of the Bush-era tax cuts as well as unemployment benefits.
House GOP Whip Eric Cantor (Va.) said he was hopeful negotiations between the administration and congressional leaders would result in a deal that would prevent tax rates from rising for the next several years, but called the House vote on Thursday a “political gimmick” that is “emblematic of a dysfunctional Washington and a sad example of what millions of Americans profoundly rejected on election day.”
“The new Republican majority will be committed to changing the culture of Washington by cutting spending and stopping government overreach so our businesses can do what they do best — innovate, compete and lead,” he said in a statement.
Incoming Speaker John Boehner (R-Ohio) and other Republicans echoed Cantor’s argument.
President Obama wants to extend tax cuts only for families with income less than $250,000 and individuals with income below $200,000, while Republicans want tax cuts for all income levels extended permanently. The GOP argues failing to extend tax cuts for the wealthy would hurt the economy because richer taxpayers are more likely to spend and invest that income.
Democrats argue Republicans are holding up tax relief for most taxpayers to protect tax breaks for the rich. They also argue the Bush tax cuts did little to create jobs during the Bush administration.
Rep. Carolyn Maloney (D-N.Y.), the chairwoman of the Joint Economic Committee, told The Hill the report highlights the need to both extend unemployment benefits and tax cuts for middle-class taxpayers.
Federal unemployment benefits expired this week, and the White House argues failing to extend the help would cost the country about 600,000 jobs by the end of 2011 and depress economic growth by 0.6 percent. It cites a report from the White House Council of Economic Advisers (CEA).
“It’s absolutely critical to extend the unemployment insurance program,” Maloney said. “It not only helps the unemployed, it helps the economy.”
If Congress fails to pass an extension during the lame-duck session, an estimated 2 million people could be without unemployment checks by the end of the month.
Maloney also said she would support a compromise proposal offered by Sen. Charles Schumer (D-N.Y.) that would cut off tax cut extensions for income higher than $1 million.
Maloney said she prefers the White House’s proposal for the tax cuts, but said she could agree to Schumer’s proposal if the preferred plan couldn’t get through the House. She also said she had talked to many other House Democrats who would also support Schumer’s proposal.
“At the end of the day, I think it’s ridiculous that we’re holding up tax cuts for the middle class to protect tax cuts for millionaires,” she said.
The poor jobs report stands in contrast with economic news that suggests a recovery is building momentum. Stock prices have jumped strongly this week on news of stronger consumer spending and improvements in the housing sector.
But the Federal Reserve has been worried for months about the fragility of the recovery and announced in November that it would begin buying long-term Treasury bonds in an effort to stimulate loans and new hiring by businesses.
Christmas sales, vehicle sales, unemployment claims and even some housing statistics have been looking better, Moody's.com Chief Economist Mark Zandi noted in an email. He said the weak report was a surprise and shows that the "recovery is fragile and has yet to hit escape velocity."
Zandi said he doesn't think the job market is as weak as the latest figures suggest, but he argued it is premature to pull fiscal policy support, including the extended unemployment benefits, from the economy.
This story was posted at 8:34 a.m. and last updated at 10 a.m.
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