Saturday, April 21, 2018
Business

Improving jobs numbers at risk as budget 'cliff' looms

WASHINGTON — A surprise drop in the jobless rate and a new measurement showing a sharp slide in consumer sentiment underscore what's at stake for a sluggish economic recovery threatened by the coming political showdown in the nation's capital.

Employers added a better-than-expected 146,000 jobs in November, and the unemployment rate tumbled two-tenths of a percentage point to 7.7 percent, the Labor Department said Friday.

But weighing against the positive numbers, the University of Michigan released its monthly measurement of consumer confidence Friday and found that it had plunged by more than 8 points. It's a clear indicator that Washington's squabbling over possible tax increases and steep government spending cuts in 2013 is affecting consumers.

"Bottom line is that the job market is holding firm despite rising worries over the fiscal cliff. If Washington can get it together reasonably soon, the job market will kick into a higher gear," said Mark Zandi, the chief economist for forecaster Moody's Analytics.

In an investor note, Bank of America Merrill Lynch economist Michelle Meyer added that "businesses have cut back investment in capital in the face of the cliff, they have yet to do so with labor. This shows some stability heading into year-end."

Still, bitter partisan political battles are worrying ordinary Americans. On Friday, financial and insurance giant Allstate released its latest Heartland survey, which also found flagging sentiment.

Asked whether the country is moving in the right direction, 75 percent of Democrats surveyed said the economy would improve in the next 12 months; 63 percent of Republicans said it would get worse.

"That's what we've seen consistently in our polls: a pretty even split, deeply divided," said Joan Walker, an Allstate executive vice president.

The measures of sentiment help explain why the political parties remain so dug in to their positions as the "fiscal cliff" approaches.

Missing from Friday's jobs report, it seemed, were the effects of Superstorm Sandy, which devastated the East Coast as it made landfall Oct. 29. The Bureau of Labor Statistics, part of the U.S. Labor Department, felt compelled to say as much when it released the monthly report.

"Our analysis suggests that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November," the bureau said, noting that response rates to its survey from businesses were within normal ranges. Statisticians revised down the previous employment estimates for September and October by a combined 49,000 jobs. Friday's report included an unusually large revision to October's government hiring numbers. The agency said there were 51,000 fewer government jobs than first reported for October.

Friday's revision to October government hiring estimates is due to incomplete data sent by local school systems nationwide that month, said Kara Sullivan, the Bureau of Labor Statistics economist who compiles jobs data on the government and health care.

More surprising than the stronger-than-expected numbers was the drop in the jobless rate to the lowest it has been since December 2008. The White House and many economists no longer think the rate is a statistical anomaly.

"Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point as a result of growing employment, and the labor force participation rate has been essentially unchanged," Alan Krueger, the head of the White House Council of Economic Advisers, said in a blog posting on the jobs report.

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