Unemployment rate falls to 8.5%; GOP still using jobs as battering ram (+video)
The better numbers, economists say, may reflect recovery from many of the negative factors that had kept growth low: the earthquake and tsunami in Japan, which hurt the auto sector; the summer uncertainty as Congress debated raising the national debt ceiling; and the continuing saga in Europe over sovereign debt.
“It appears we are now back on track,” says John Canally, chief economist at LPL Financial in Boston. “Fed Chairman Ben Bernanke has said the economy was a little bit unlucky; now, maybe we’ll have a run of months without any bad luck.”
Improvement in the unemployment rate may also reflect a shift in the number of people looking for work. The total labor force has been steadily shrinking, observes Mr. Naroff. “This may indicate there are a lot of frustrated workers out there, or maybe people coming off the unemployment rolls because they have run out of benefits and are taking some time off, or maybe baby boomers starting to retire,” he says. “But I don’t think we need to be alarmed by this.”
Despite the jobs improvement, the economy still has a long way to go to make up the 8.9 million jobs that were lost in the recession. At the current rate, it would take about seven more years – until about 2019 – to get back to the prerecession unemployment rate, writes Heidi Shierholz, an economist at the Economic Policy Institute, a think tank in Washington.
Politicians were quick to interpret the new numbers to buttress their own views on the state of the economy. Democratic House leader Nancy Pelosi of California, saying in a statement that the report shows a step in the right direction, castigated Republicans for precipitating an unnecessary crisis over the debt ceiling “that hurt our middle class.”