Economy adds jobs as unemployment falls below 9 percent

The labor market showed signs of strong growth in February, as the nation added 192,000 jobs and the unemployment rate dipped below 9 percent for the first time since April 2009.

The unemployment rate dropped to 8.9 percent in February
from 9.1 percent in January, and is down from 9.8 percent as recently as
November 2010.

{mosads}Much of the drop comes from people who have left the
workforce and given up pursuit of a job, but there is also increasing
confidence that the economy is turning around. 

Job growth strengthened in February, and in its monthly
report the Bureau of Labor Statistics  also highlighted revised figures in December and January that show stronger growth. The
economy gained 152,000 jobs in December instead of the 121,000 previously
estimated, and 63,000 jobs in January instead of the 36,000 initially
estimated.

Austan Goolsbee, the president’s chairman of the Council of Economic Advisers, credited the administration’s actions — particularly on the payroll tax cut and the investment tax credit — with the lower unemployment numbers but he also cautioned that monthly numbers are “volatile.”

“The overall trajectory of the economy has improved dramatically over the past two years, but there will surely be bumps in the road ahead. The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the administration always stresses, it is important not to read too much into any one monthly report” he said in a statement.

Sen. Bob Casey Jr. (D-Pa.), the chairman of the Joint Economic Committee, hailed the numbers and said it was nice not to have a “mixed report” for a change. The unemployment rate for Casey’s home state dropped to 8.2 percent, and Casey said he hoped the dip in the national rate below 9 percent would have a positive psychological effect. 

At the same time, Casey said, Congress must stay focused on job creation. “We’ve got lots of work to do and have to keep on track with job creation,” he said in an interview. 

The gains come as President Obama and congressional Republicans
are locked in a fight over how much to reduce government spending. Part of that
debate has focused on the economy, with Democrats warning that cuts proposed by
Republicans could stifle economic growth.

Goolsbee echoed that theme.

“We will continue to work with Congress to find ways to reduce spending, but not at the expense of derailing progress in the job market, making the investments we need to educate our workers, investing in science, and building the infrastructure our companies need to succeed,” he said.

Speaker John Boehner (R-Ohio) said the job growth is welcome news, and sought to tie it to the extension of George W. Bush-era tax rates. Republicans and Obama agreed to extend all of the Bush-era tax rates at the end of December, with Obama conceding to the extension of tax rates for the wealthy. 

“Removing the uncertainty caused by those looming tax hikes provided much-needed relief for private-sector job creators in America,” Boehner said in a statement. “Now we must build on it by eliminating the job-crushing uncertainty being caused by excessive spending, borrowing and regulating in Washington.”

Reports from Goldman Sachs and Mark Zandi, the chief economist for Moody’s Analytics, suggested the $61 billion in cuts House Republican would impose through their spending bill for the rest of the year could cost the economy as many as 700,000 jobs, though those figures were dismissed by Federal Reserve Chairman Ben Bernanke. However, Bernanke also said the cuts could trim economic growth by a more modest amount, and suggested that lawmakers look to attack the budget deficit over a five- or 10-year period.

Casey said lawmakers should take the report by Zandi “very seriously.” While Congress must continue to cut spending, he said, Washington must also work to allow the economy to grow. 

“We have to reduce spending. That’s what we have been doing,” he said. “Bus as we’re cutting, we’ve got to grow. And we can do both.”

Bernanke earlier this week said
there was reason for optimism about the job market. He told the Senate Banking
Committee there was increasing evidence of improvements in the economy, though
he also repeated his warning that it would take years for unemployment to reach
a normal level.

Many left the workforce during the recession and slow recovery, so another worry for policymakers is that the stronger numbers will bring a large number of people back to the workforce. Analysts of the labor market have suggested the unemployment rate could rise even as the economy adds hundreds of thousands of jobs if many of those millions of “lost” workers return to try to find work. 

Casey said he hoped those workers did return, but that they did not cause the unemployment rate to rise even as the economy adds jobs.

This story was last updated at 10:31 a.m.