Cue the Cantor sour-face: unemployment drops to 8.6 percent

Team Sourpuss: Sen. Mitch McConnell and Reps. Eric Cantor and John Boehner

Because good news for the economy is bad news for the McConnell plan

This won’t go over well in GOPerland:

The American unemployment rate unexpectedly fell to its lowest level in two and a half years in November, despite the many global crises batting against the economy.

The unemployment rate fell to 8.6 percent, after having been stuck around 9 percent for most of 2011, the Labor Department said Friday. Additionally, a separate government survey found that the nation’s employers added 120,000 jobs last month, after adding 100,000 jobs in October.

These numbers were not particularly impressive by historical standards — they were just about high enough to keep up with population growth — but employment in the previous two months was revised upward substantially, too.

“If you go back to August, all sorts of people were telling us that the economy was headed straight into recession,” said Paul Ashworth, senior United States economist at Capital Economics. “Since that point, we’ve become more and more worried about the euro zone and other areas of the global economy, but somehow, at least for the moment, the U.S. economy seems to be shrugging all that off.” …

The news, of course, is not all good:

The jobless rate fell partly because more workers got jobs, but also because about 315,000 workers dropped out of the labor force, and the jobless rate counts only people who are actively looking for work. Even so, the country still has a backlog of more than 13 million unemployed workers, whose periods of unemployment averaged an all-time high of 40.9 weeks.

“They say businesses are refusing to look at résumés from the unemployed,” said Esther Perry, 59, of Bedford, Mass., who participated in a recent report on unemployed workers put together by USAction, a liberal coalition. “What do you think my chances are? Once unemployment runs out, I don’t know what I will do.”

The continued fragility of the economy underscores just how much President Obama needs additional stimulus, a tidy and fast resolution to the European debt crisis or some other breakthrough to reinvigorate the job market before the 2012 presidential election.

On the issue of government action to stimulate the economy, there has been some movement in Washington toward extending the payroll tax cut, which is currently scheduled to expire at the end of this month. Economists have said that allowing the expiration of the tax cut — which lets more than 160 million mostly middle-class Americans keep two percentage points more of their pay checks — could be a severe drag on both job creation and output growth.

“If isn’t extended, it will have an impact on consumer spending in the first half of next year because it’ll put a big dent in consumer income,” said Conrad DeQuadros, senior economist at RDQ Economics. “To the extent that reduces spending, there will be second-round effects on hiring.”

The other major stimulus program scheduled to expire by 2012 is the extended unemployment insurance benefits, which allow some jobless workers to continue receiving benefits for as long as 99 weeks. Already, millions of workers have exhausted their benefits, and ending extended benefits is likely to affect another sizable chunk of the unemployed.

“In January alone, 1.8 million workers who currently receive federal unemployment insurance or would have begun to receive it will be cut off if Congress does not renew the program,” according to a recent report from the National Employment Law Project. …

And it seems that Republicans are figuring out that no matter what Grover Norquist says, they can’t get away, politically, with saying no to the middle class tax break extension. All that remains to be seen is how hard a bargain Democrats choose to drive for the inevitable GOP cave on unemployment and the payroll tax – or if they allow Republicans to exact a pound of flesh, for their first ever demand to pay for a tax cut.

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