Economy loses 95,000 jobs in last report before election

The last unemployment report before the midterm elections brought more unwelcome news for President Obama and Democrats, as the nation's economy lost jobs in September and private-sector growth remained sluggish. 

The unemployment rate stayed at 9.6 percent as the overall economy lost 95,000 jobs for the month. Most of that loss came from a decline in government employment and particularly from a drop in temporary Census 2010 jobs. The private sector added 64,000 jobs for the month. 

The string of negative news on the jobs front is hurting Democrats ahead of an election where Republicans hope to retake majorities in the House and Senate. President Obama said earlier this week that unemployment is giving Republicans political momentum ahead of the Nov. 2 election.

Obama on Friday joined other Democrats in highlighting the growth in private sector jobs, which he noted have been positive for nine consecutive months. But Obama noted that this good news was "tempered by a net job loss" over the last month. 

Much of the loss in jobs came from government cuts, and Obama sought to pin the blame on those losses on Republicans, who he said had stalled state aid and small-business lending bills in the Senate. 

"I should note that these continued layoffs in state and local governments...would be even worse without the help we provided to states over the last 20 months," he said.

The president also called for more investment in infrastructure, combined with closing tax loopholes, as a way to spur job creation, which Obama emphasized as the "the moral and national challenge of our time."

Republicans sought to capitalize on the report as a final verdict on the White House's economic policies ahead of the election. 

"After nearly two years of weak leadership and broken promises, the American people will go to the polls in less than a month and reject this administration's economic mismanagement," Republican National Committee Chairman Michael Steele said in a statement. 

Congressional Democrats argue the economy would be in much worse shape without their efforts. 

Rep. Carolyn Maloney, the chairwoman of the Joint Economic Committee, said people are suffering from "revisionist history" when it comes to the economy. 

Obama inherited an economy that was losing 600,000 jobs a month, and now the private sector has added jobs for nine months in a row while the nation's gross domestic product is expanding, Maloney said. Democrats responded in a "timely and forceful manner to the Great Recession," she said, with a series of steps that included the stimulus measure, extending unemployment benefits and moving legislation to help small businesses. 

"Is it a total success? No, but it's moving in the right direction," she said. 

The report is better than some expectations that September would see the unemployment rate jump to 9.7 percent with no private-sector job growth. 

But the job growth in September is about half what is necessary for the unemployment rate to drop.

The figures could increase pressure on the Federal Reserve to provide more stimulus to the economy. The Fed is in an internal debate over launching another round of "quantitative easing" in which it would start buying assets to boost the economy.

Because of the possibility of Fed action, stocks rose Friday and the Dow Jones Industrial average moved above 11,000 for the first time since spring. This continues a bull market that began in September after fears of a double-dip recession fell aside. 

The jobs report also showed more people are giving up the search for a job. The number of people marginally attached to the labor force — meaning they had not searched for a job in the last four weeks — was 2.5 million, up from 2.2 million a year ago. 

The Labor Department also adjusted figures downward for the months of July and August. The economy lost 123,000 jobs in those two months instead of the previously estimated 108,000. 

This is probably the last monthly report in which the 2010 Census will have a major impact on job creation. In the spring, temporary hires by the Census boosted employment, but as those workers have been let go they have created a consistent drag on the employment figures. 

That has coincided with slower growth in the private sector than was hoped for earlier this year.

This story was posted at 8:34 a.m. and updated at 12:06 p.m.

Michael O'Brien contributed to this story.

An earlier version of this story included a fractured quote from Rep. Maloney that has been corrected. 

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