Jobless rate up to 9.8 percent as economy adds only 39,000 jobs

December 3, 2010

THe Hill

Ian Swanson

The jobless rate rose to 9.8 percent in November as the economy added a disappointing 39,000 jobs, the Bureau of Labor Statistics reported Friday.

Forecasters had expected the economy to add as many as 150,000 jobs, and the November numbers are a steep fall from a month before, when the economy added 172,000 jobs.

The weak report comes as the White House and congressional Republicans negotiate a deal to temporarily extending all of the Bush-era tax cuts as well as unemployment benefits. The weak report suggests the labor market remains fragile, and is likely to bolster calls to extend both the tax cuts and the unemployment benefits.

Federal unemployment benefits expired this week, and the White House argues failing to extend the help would cost the country about 600,000 jobs by the end of 2011 and depress economic growth by 0.6 percent. It cites a report from the White House Council of Economic Advisers (CEA).

If Congress fails to pass an extension during the lame-duck session, an estimated 2 million people could be without unemployment checks by the end of the month. 

In the tax debate, President Obama wants to extend tax cuts only for families with income under $250,000 and individuals with income below $200,000, while Republicans want tax cuts for all income levels extended permanently. The GOP argues failing to extend tax cuts for the wealthy would hurt the economy since richer taxpayers are more likely to spend and invest that income.

Republicans used the jobs report to hammer House Democrats for scheduling a vote Thursday on extending tax cuts only for middle-class families and not for all taxpayers. The legislation was approved but is not expected to move through the Senate.

House GOP Whip Eric Cantor (Va.) said he was hopeful negotiations between the administration and congressional leaders would result in a deal that would prevent tax rates from rising for the next several years, but called the House vote on Thursday a "political gimmick" that is emblematic of a dysfunctional Washington and a sad example of what millions of Americans profoundly rejected on election day."

"The new Republican majority will be committed to changing the culture of Washington by cutting spending and stopping government overreach so our businesses can do what they do best -- innovate, compete and lead," he said in a statement.

The poor jobs report stands in contrast with economic news that suggests a recovery is building momentum. Stock prices have jumped strongly this week on news of stronger consumer spending and improvements in the housing sector.

<- Go Back