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Job growth lifts outlook on economy

Unemployment rate reaches a two-year low as companies add 216,000 workers to the payrolls.

April 02, 2011|By Jim Puzzanghera, Alana Semuels and Paul West, Los Angeles Times
  • The unemployment rate fell in March to 8.8%  a full percentage point lower than in November and the sharpest four-month drop in 28 years. Above, a job seeker walks the floor at a large career fair in New Jersey in January.
The unemployment rate fell in March to 8.8% a full percentage point lower… (MIKE SEGAR, REUTERS )

Reporting from Washington and Los Angeles — The nation's job-creation engine revved up last month and pushed the unemployment rate to its lowest level in two years, spreading optimism that the economic recovery is firmly in place and giving President Obama a political boost.

The economy lured back unemployed Americans who had given up hope of getting another paycheck as increases across nearly all sectors led to 216,000 additional jobs, the Labor Department said.

The unemployment rate ticked down to 8.8% — a full percentage point lower than in November and the sharpest four-month drop in 28 years.

Obama, trying to fend off a Republican push for deep budget cuts that administration officials warn could derail the recovery, said Friday that the economy was showing "signs of real strength." But he cautioned that millions of Americans still are out of work and that "we have to keep the momentum going."

The improvement bettered economists' predictions of about 200,000 new jobs and led forecasters to say that strong job growth appeared to have taken hold.

Chris Rupkey, chief financial economist for the Bank of Tokyo-Mitsubishi in New York, said there was "powerful forward momentum" in the jobs market, which should help buffet the headwind on the economy from rising gasoline prices.

That price rise, as well as uncertainty over the Middle East and debt-burdened economies in Europe, might yet cause the economy to slow again.

But the favorable jobs report had an immediate effect on Wall Street, where the Dow Jones industrial average rose Friday to nearly 12,377, and on the political scene, where Republicans could find it difficult to push their conservative agenda in Congress.

Republicans have said that employers aren't hiring because of overregulation, overspending and the new healthcare law, and that the economic recovery requires a change of direction. As businesses start hiring again, that argument weakens.

Republicans also could find it tougher to push for deep budget cuts as public-sector job losses continue to be one of the few major drags on employment.

The GOP won big in elections last fall at a time when some economists predicted unemployment might hit double digits this year. Amid worries about the economy, Obama's reelection prospects dimmed.

But his standing in opinion polls has improved. And partly because of continued economic recovery, national polls show his reelection prospects now are as good or better after a little more than two years in office than Bill Clinton's or George W. Bush's, both of whom won second terms.

At this point, Obama's presidency is tracking closer to that of Ronald Reagan, who rode an economic rebound to victory, than to Jimmy Carter, who was bounced after one term because of economic woes.

"Reagan's rise from a pretty unfavorable position…was built on a dramatic improvement in jobs numbers in '83 and '84," said Carroll Doherty, associate director of the nonpartisan Pew Research Center.

During that two-year period, the unemployment rate fell from 10.4% to 7.2%. The recent drop in the unemployment rate from 9.8% in November is the best since then.

House Majority Leader Eric Cantor (R-Va.) downplayed the job growth, describing it as an "uptick." While acknowledging it was good news, he said the still-high unemployment showed Republicans "need to continue our efforts in Washington to foster pro-growth policies that will help businesses small and large to innovate and expand."

White House officials were delighted by the new numbers, which they said surpassed their own internal projections.

"Obviously, things can go wrong, but this continues to be a very solid trend that we've seen over the last year," said Austan Goolsbee, chairman of the Council of Economic Advisors. "Yes, it was a deep hole, but we're growing our way out of that hole.''

Optimism also has spread to unemployed workers, such as 37-year-old Air Force veteran Matthew Mabry of Bakersfield. On Thursday, he signed up for job-search help from Jewish Vocational Services.

"During the summer, I was in a funk," he said. "I didn't look for jobs."

But after landing a seasonal position at a Target warehouse during the holidays, Mabry said he's ready to start seriously looking for a full-time job.

Nelson Hyde Clark, 50, of San Francisco, who was laid off from his job as a landscaping supply salesman in February 2008, said he has started posting ads on Craigslist again looking for work.

The same goes forBarbara Deschaine, 55, of Agua Dulce, a licensed massage therapist and gemologist, who said she has been limited to "odds and ends" jobs for two years.

They're not alone. The number of so-called discouraged workers — those who haven't actively looked for a job for at least a month — dropped to 921,000 last month, down sharply from a high of 1.3 million in December, the Labor Department said.

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