U.S. jobless rate falls to 44-month low; figures questioned
By Thomas Olson
Published: Friday, Oct. 5, 2012, 8:38 a.m.
A strong dose of positive job news may have cheered President Obama's supporters on Friday, but the report that unemployment fell to its lowest point in almost four years was too good to be true for his re-election foes.
The better-than-expected report said the number of unemployed dropped by 456,000, lowering the unemployment rate to 7.8 percent, a turn of events that prompted a prominent business figure to allege the Obama administration fudged the numbers.
Jack Welch, the former CEO of General Electric Co., tweeted that the job numbers were “unbelievable” and that the Obama campaign “will do anything” to get the president re-elected. Welch could not be reached for comment, but later in the day told The Wall Street Journal, “I wasn't kidding.”
Bureau of Labor Statistics spokeswoman Stacey Standish said the agency is “independent and nonpartisan,” and that “no political appointee is involved in the production or analysis of the unemployment data.”
Obama, who appeared to fare poorly in Wednesday's first presidential debate, said the news is “a reminder that this country has come too far to turn back now.” Jabbing at his rival's plans, he declared, “We've made too much progress to return to the policies that caused this crisis in the first place.”
But Republican challenger Mitt Romney saw little to like in the day's new government numbers.
“This is not what a real recovery looks like,” the former Massachusetts governor and businessman said, an analysis echoed by other Republicans throughout the day.
“We created fewer jobs in September than in August, and fewer jobs in August than in July, and we've lost over 600,000 manufacturing jobs since President Obama took office,” Romney added.
“If not for all the people who have simply dropped out of the labor force, the real unemployment rate would be closer to 11 percent,” he said.
The BLS said the economy added 114,000 nonfarm jobs last month, based on a survey of employers.
“Labor market improvement is still gradual,” said Nigel Gault, chief U.S. economist for IHS Global Insight in Lexington, Mass. “In a normal, healthy recovery, we'd be seeing more like 200,000 to 250,000 jobs created.”
The unemployment rate contrasted sharply with 8.1 percent in August and 9.0 percent in September 2011. It also marked a return to the level it was in January 2009 when Obama took office.
Financial markets seemed less impressed. The Dow Jones industrial average climbed as much as 86 points in early trading but drifted lower for most of the rest of the day. It finished up 34 points at 13,610. The Standard & Poor's 500 index, a broader measure, was down by a fraction of a point.
The report came one month before the presidential election and after months of campaigning that has often focused on the economy and jobs. The bureau will generate one more jobs report prior to the election Nov. 6, but that economic snapshot will come just four days before voters go to the polls.
“The pleasant surprise is that the rate has dropped under 8 percent for the first time in about four years, and that would make any incumbent happy,” said Heidi Shierholz, economist at the Economic Policy Institute in Washington.
“But the economy is really more about how people feel about their own economic situation, and I doubt there's a big change there,” Shierholz said. “So I doubt it will have that much effect on the election.”
The labor force — people working or actively looking for a job — increased by 418,000 to a total of 155.1 million, according to the bureau's survey of households. It was the first increase since June and a sign that more people found jobs and more jobless people who had stopped searching for work were encouraged enough to start looking again.
“Up until now, much of the improvement we've seen in the unemployment rate was due to people dropping out of the workforce,” which artificially makes the jobless ratio look healthier, said Shierholz.
The ratio of adults in the workforce — called the “labor force participation rate” — improved slightly, to 63.6 percent last month from 63.5 percent in August.
“That was the lowest level since January 1981,” during the last deep recession, said Gault. “So the rate is now off the floor. But it's just one month of increase.”
Based on a survey of employers, the bureau also revised August job creation to 142,000 from 96,000, and revised July figures to 181,000 from 141,000.
The two months were revised upward by a combined 86,000 jobs, but it was “not unusual to see revisions of that order,” said Shierholz.
Government added 91,000 jobs, while the private sector lost 5,000.
Gault said the data indicated more teachers were hired on state and local levels as school resumed after the summer break. That's good news in terms of the health of state and local finances, he said, but that kind of hiring is unlikely to be repeated.
September data showed the private sector added 104,000 jobs, while the government added 10,000 jobs.
Employment last month grew mostly in the health care and transportation and warehousing segments, which accounted for 61,000 jobs, or more than half of the jobs added in September.
Manufacturing jobs, however, declined by 16,000 last month, leaving the sector relatively unchanged since April.
“Manufacturing was down for the second month in a row,” said Gault. “Orders are weak, and product has slowed, plus there's weakness in exports and in business spending.”
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or email@example.com. The Associated Press contributed to this report.
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