Washington Bureau -
DON LEE and JIM PUZZANGHERA
Reporting from Washington
The nation's unemployment rate jumped to an unexpected 10.2 percent in October, throwing 190,000 more Americans out of work, raising questions about whether the budding economic recovery will endure, and confronting President Obama with a politically explosive new challenge. Not since 1983, after a double-dip downturn had sent the auto, steel and housing industries plunging, has the jobless rate gone so high. And many economists predicted it would go higher still in coming months. Some 15.7 million workers now have no jobs, the government said in releasing its monthly unemployment report, and an estimated 5 million more are working fewer hours and drawing smaller pay checks than they were before the country fell into the worst recession in a generation. In an effort to blunt the impact of the dismal news, Obama made a point of signing legislation Friday that provides additional aid for the jobless and expands and extends home buyer tax credits. But few economists thought either measure would have a substantial impact on the worsening employment picture, or solve the president's increasing urgent political problem: how to spur the creation of more jobs and quickly. While most analysts had expected the unemployment rate to inch up from September's 9.8 percent, the October spike was larger than expected. And it was particularly disturbing because it was not pushed up by a flood of new workers coming into the labor market, as often happens when the economy begins to climb out of a recession. Rather, the latest downturn resulted from continuing cutbacks among those with jobs. "I'm more nervous about the staying power of the recovery after today's numbers," Mark Zandi, chief economist at Moody's Economy.com. He said he now expected joblessness to stay in double digits throughout next year, climbing to as high as 11 percent. That level of unemployment, stretching as it does over most of the country instead of being confined to one hard-hit region like the "Rust Belt of the 1980s, presents Obama and his Democratic colleagues in Congress with both economic and political challenges. On the political front, a bad economy threatens the Democrats' control of Congress as the 2010 off-year elections approach. Even if economic recovery continues, job gains are likely to come slowly and unemployment is expected to remain high for most if not all of next year. Hitting double digits will have an immediate psychological effect across the country, said economist and former Labor Secretary Robert Reich, who now teaches at the University of California-Berkeley. It's "an important political threshold" and will probably force the administration's hand on additional steps to stimulate jobs, said Reich, who served as Labor Secretary in the Clinton administration. The Democrats' political vulnerability was clear in the reaction of congressional Republicans. "The president himself has said that job creation is the ultimate measure of economic performance," said House Minority Leader John Boehner (R-Ohio). "Today's report is just another reminder that American families and small businesses are still struggling as the White House response continues to fall short." For his part, Obama spotlighted congressional action to extend jobless benefits for 14 weeks in all states and 20 weeks in hard-hit states, such as California. The legislation also extends until April 30 the popular tax credit of up to $8,000 for first-time home buyers; it also creates a credit of up to $6,500 for existing homeowners who want to move up to a new house. The income requirements for the credit also were expanded. Speaking in the Rose Garden, Obama said his administration had succeeded in stopping "the free fall of the economy" and that his economic team was considering ideas to create jobs. He mentioned additional spending on roads and bridges, further tax cuts for business, steps to increase credit for small businesses and new efforts to promote U.S. exports. And there were at least two bright spots in the October report. While large, the number of jobs lost declined as it has for the past several months and the number of temp jobs, which are considered a bellwether, increased. Absent government action, however, those developments and other factors point toward a long, slow recovery in jobs. What's worse from the White House perspective is the fact that its policy options are limited, both politically and in terms of effectiveness. Reich and some other economists say that what's really need is another stimulus package like the $787 billion spending package approved by Congress last February. That is considered a political non-starter. Republicans are already attack the first stimulus as a failure that needlessly inflated the federal deficit. And congressional Democrats, who pared back the February stimulus out of concern about voters' reaction to more spending, have little stomach for a second round. A majority of economists believe Obama's Recovery Act and other stimulus efforts such as the cash-for-clunkers program have helped the economy turn the corner, with economic output growing in the third quarter at a 3.5% annual rate after four straight quarters of contraction. The return to growth prompted economists to declare that the worst recession since World War II was over. And the White House has said that the stimulus created or saved 1 million jobs. And Obama and his advisors have repeatedly called for patience, saying that job growth always lags broader economic growth. Regardless, the Obama administration said in January that unemployment would not top 8% this year if the stimulus was approved, a projection that has since been revised and is likely to get updated again in light of the latest jobs report. "We are looking to move forward in exploring options further in the coming weeks, not months," a senior administration official said Friday, tacitly acknowledging the new pressure on the White House. The jobless rate when Obama took office was 7.6%, and it was a mere 4.9% in December 2007, when the latest recession officially began. Since then, the number of unemployed workers has increased by 8.2 million as of October, according to figures compiled by the Bureau of Labor Statistics. The situation is actually worse: The government doesn't count as officially unemployed the so-called discouraged workers who have given up looking for jobs -- which in October numbered 808,000, up from 484,000 a year earlier. There also were 9.3 million people who reported they had little choice but to work part time because their hours had been cut or they could not find full-time jobs. If this group and discouraged workers are included, along with others on the fringe of the labor market, the nation's unemployment and underemployment rate in October was 17.5%. End it
The nation's unemployment rate jumped to an unexpected 10.2 percent in October, throwing 190,000 more Americans out of work, raising questions about whether the budding economic recovery will endure, and confronting President Obama with a politically explosive new challenge. Not since 1983, after a double-dip downturn had sent the auto, steel and housing industries plunging, has the jobless rate gone so high. And many economists predicted it would go higher still in coming months. Some 15.7 million workers now have no jobs, the government said in releasing its monthly unemployment report, and an estimated 5 million more are working fewer hours and drawing smaller pay checks than they were before the country fell into the worst recession in a generation. In an effort to blunt the impact of the dismal news, Obama made a point of signing legislation Friday that provides additional aid for the jobless and expands and extends home buyer tax credits. But few economists thought either measure would have a substantial impact on the worsening employment picture, or solve the president's increasing urgent political problem: how to spur the creation of more jobs and quickly. While most analysts had expected the unemployment rate to inch up from September's 9.8 percent, the October spike was larger than expected. And it was particularly disturbing because it was not pushed up by a flood of new workers coming into the labor market, as often happens when the economy begins to climb out of a recession. Rather, the latest downturn resulted from continuing cutbacks among those with jobs. "I'm more nervous about the staying power of the recovery after today's numbers," Mark Zandi, chief economist at Moody's Economy.com. He said he now expected joblessness to stay in double digits throughout next year, climbing to as high as 11 percent. That level of unemployment, stretching as it does over most of the country instead of being confined to one hard-hit region like the "Rust Belt of the 1980s, presents Obama and his Democratic colleagues in Congress with both economic and political challenges. On the political front, a bad economy threatens the Democrats' control of Congress as the 2010 off-year elections approach. Even if economic recovery continues, job gains are likely to come slowly and unemployment is expected to remain high for most if not all of next year. Hitting double digits will have an immediate psychological effect across the country, said economist and former Labor Secretary Robert Reich, who now teaches at the University of California-Berkeley. It's "an important political threshold" and will probably force the administration's hand on additional steps to stimulate jobs, said Reich, who served as Labor Secretary in the Clinton administration. The Democrats' political vulnerability was clear in the reaction of congressional Republicans. "The president himself has said that job creation is the ultimate measure of economic performance," said House Minority Leader John Boehner (R-Ohio). "Today's report is just another reminder that American families and small businesses are still struggling as the White House response continues to fall short." For his part, Obama spotlighted congressional action to extend jobless benefits for 14 weeks in all states and 20 weeks in hard-hit states, such as California. The legislation also extends until April 30 the popular tax credit of up to $8,000 for first-time home buyers; it also creates a credit of up to $6,500 for existing homeowners who want to move up to a new house. The income requirements for the credit also were expanded. Speaking in the Rose Garden, Obama said his administration had succeeded in stopping "the free fall of the economy" and that his economic team was considering ideas to create jobs. He mentioned additional spending on roads and bridges, further tax cuts for business, steps to increase credit for small businesses and new efforts to promote U.S. exports. And there were at least two bright spots in the October report. While large, the number of jobs lost declined as it has for the past several months and the number of temp jobs, which are considered a bellwether, increased. Absent government action, however, those developments and other factors point toward a long, slow recovery in jobs. What's worse from the White House perspective is the fact that its policy options are limited, both politically and in terms of effectiveness. Reich and some other economists say that what's really need is another stimulus package like the $787 billion spending package approved by Congress last February. That is considered a political non-starter. Republicans are already attack the first stimulus as a failure that needlessly inflated the federal deficit. And congressional Democrats, who pared back the February stimulus out of concern about voters' reaction to more spending, have little stomach for a second round. A majority of economists believe Obama's Recovery Act and other stimulus efforts such as the cash-for-clunkers program have helped the economy turn the corner, with economic output growing in the third quarter at a 3.5% annual rate after four straight quarters of contraction. The return to growth prompted economists to declare that the worst recession since World War II was over. And the White House has said that the stimulus created or saved 1 million jobs. And Obama and his advisors have repeatedly called for patience, saying that job growth always lags broader economic growth. Regardless, the Obama administration said in January that unemployment would not top 8% this year if the stimulus was approved, a projection that has since been revised and is likely to get updated again in light of the latest jobs report. "We are looking to move forward in exploring options further in the coming weeks, not months," a senior administration official said Friday, tacitly acknowledging the new pressure on the White House. The jobless rate when Obama took office was 7.6%, and it was a mere 4.9% in December 2007, when the latest recession officially began. Since then, the number of unemployed workers has increased by 8.2 million as of October, according to figures compiled by the Bureau of Labor Statistics. The situation is actually worse: The government doesn't count as officially unemployed the so-called discouraged workers who have given up looking for jobs -- which in October numbered 808,000, up from 484,000 a year earlier. There also were 9.3 million people who reported they had little choice but to work part time because their hours had been cut or they could not find full-time jobs. If this group and discouraged workers are included, along with others on the fringe of the labor market, the nation's unemployment and underemployment rate in October was 17.5%. End it
