After Wall Street stabilized last spring, it didn’t take long for the
economy to become a political afterthought to the major battle of the year
in Washington: health-care reform. But last Tuesday’s off-year election broke
D.C.’s political trance like a brick through plate glass. Republicans
triumphed in two major gubernatorial races thanks largely to independents
fleeing Democrats over economic worries. Suddenly every politician in town
cares about the economy more than anything else.
So Friday’s jobless number from the Labor Department will quickly become a political football. The Labor Department reported that the widely watched unemployment rate rose to 10.2%, the highest rate since April 1983, as non-farm payrolls declined by 191,000 in October, down from a revised loss of 219,000 jobs in September.
The job news may actually provide fuel to both camps.
The rising unemployment rate bolsters Republicans who have been arguing that the
stimulus bill, which most economists credit with speeding economic recovery,
has only made matters worse on the job front and October’s numbers show that the economy is continuing to shed jobs. “It’s bewildering to see the
same administration that sold its trillion-dollar spending plan this spring
as a guarantee against 8% unemployment claiming it created 1 million
jobs, especially since it is a sad fact 3 million jobs have been lost since
the stimulus was signed into law,” said Senate Republican leader Mitch
McConnell Thursday. See 25 people to blame for the financial crisis.
Democrats privately have been hoping that the
surprisingly powerful economic turnaround will start producing real job
growth by next spring, and the declining pace of job losses backs that hope up. “With the economy growing again, things should feel
more solid by spring, and that should start working to our advantage,” says
one senior Treasury official. Friday’s report offers some comfort on that front in that the monthly job loss number continues to trend down, and also because the 10.2% jobless rate gives the Federal Reserve little reason to begin raising interest rates anytime soon, which augurs well for economic improvement in 2010.
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