WASHINGTON -- The U.S. unemployment rate fell to 7.8 percent last month, dropping below 8 percent for the first time in nearly four years and giving President Barack Obama a potential boost with the election a month away.
The rate declined from 8.1 percent because the number of people who said they were employed soared by 873,000 - an encouraging sign for an economy that's been struggling to create enough jobs.
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The number of unemployed Americans is now 12.1 million, the fewest since January 2009.
The Labor Department said employers added 114,000 jobs in September. It also said the economy created 86,000 more jobs in July and August than the department had initially estimated.
Wages rose in September. And more people started looking for work.
The revisions show employers added 146,000 jobs per month from July through September, up from 67,000 in the previous three months.
The 7.8 percent unemployment rate for September matches the rate in January 2009, when Obama took office. In the months after Obama's inauguration, the rate rose sharply and had topped 8 percent for 43 straight months.
The decline in the unemployment rate comes at a critical moment for Obama, who is coming off a weak debate performance this week against GOP challenger Mitt Romney.
The September employment report may be the last that might sway undecided voters. The October jobs report will be released only four days before Election Day.
Romney released a statement that focused on the job figures, which declined in September from August. He also noted that manufacturing has lost 600,000 jobs since Obama took office.
"This is not what a real recovery looks like," Romney said in a statement.
But Sal Guatieri, an economist at BMO Capital Markets, said the report signals improvement.
"An overall better-than-expected jobs report, consistent with most recent data that suggest the economy is gaining some momentum," Guatieri said in a note to clients. "The sizeable drop in the unemployment rate could lift the president's re-election chances following a post-debate dip."
Labor Secretary Hilda Solis was asked on CNBC about suspicions that the Obama administration might have skewed the jobs numbers to aid Obama's re-election prospects.
"I'm insulted when I hear that because we have a very professional civil service," Solis said. "I have the highest regard for our professionals that do the calculations at the (Bureau of Labor Statistics). They are trained economists."
After the jobs report was released, the Dow Jones industrial average gained 60 points in the first hour of trading. Broader stock indexes also rose.
The yield on the 10-year U.S. Treasury note climbed to 1.73 percent from 1.68 percent just before the report. That suggested that investors were more willing to take on risk and shift money from bonds into stocks.
The job market has been improving, sluggishly but steadily. Jobs have been added for 24 straight months. There are now 325,000 more than when Obama took office.
The number of employed Americans comes from a government survey of 60,000 households that determines the unemployment rate. The government asks a series of questions, by phone or in person. For example:
Do you own a business? Did you work for pay? If not, did you provide unpaid work for a family business or farm? (Those who did are considered employed.)
Afterward, the survey participants are asked whether they had a job and, if so, whether it was full or part time. The government's definition of unemployed is someone who's out of work and has actively looked for a job in the past four weeks.
The government also does a second survey of roughly 140,000 businesses to determine the number of jobs businesses created or lost.
The September job gains were led by the health care industry, which added 44,000 jobs - the most since February. Transportation and warehousing also showed large gains.
The revisions also showed that federal, state and local governments added 63,000 jobs in July and August, compared with earlier estimates that showed losses.
Still, many of the jobs the economy added last month were part time. The number of people with part-time jobs who wanted full-time work rose 7.5 percent to 8.6 million, the most since February 2009.
But overall, Friday's report dispelled some fears about the job market.
The "U.S. could be growing jobs at a marginally faster pace than feared mid-summer," Guy LeBas, a strategist at Janney Capital Markets, wrote in a research note. "Even with the issues in Europe and slowing production in China, U.S. economic activity does not look to be bearing the brunt of global downside, at least not anymore."
|@ EddyElfenbein : In 25 months, the US economy lost 8.779 million jobs. Over the next 31 months, we gained back 4.256 million, or 48.5% of what we lost.|
Alan Krueger, chairman of the White House's Council of Economic Advisers, just released a statement on the jobs report. Here is an excerpt:
While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression. It is critical that we continue the policies that are building an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007.
Most pressing, Congress should pass an extension of middle class tax cuts that President Obama proposed, and the Senate passed. This extension would prevent the typical middle class family from facing a $2,200 tax increase at the beginning of next year. In addition, the President has proposed a plan that will enable responsible homeowners to refinance their mortgage and take advantage of today’s historically low interest rates. To create more jobs in particularly hard-hit sectors, President Obama continues to urge Congress to pass elements of the American Jobs Act, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and to enable them to rehire hundreds of thousands of teachers and first responders.
|@ justinwolfers : Taking the long view: The labor market is still sick. Unemployment of 7.8% is still too high. We've still got a long haul ahead of us.|
|@ MichaelMandel : You have to go back to Reagan to see a bigger one-year decline in the unemployment rate|
|@ mattyglesias : If we rehired the teachers who've been laid off since November 2011, that'd add almost 300,000 jobs.|
Republican presidential nominee Mitt Romney just released the following statement:
This is not what a real recovery looks like. We created fewer jobs in September than in August, and fewer jobs in August than in July, and we’ve lost over 600,000 manufacturing jobs since President Obama took office. If not for all the people who have simply dropped out of the labor force, the real unemployment rate would be closer to 11%. The results of President Obama's failed policies are staggering – 23 million Americans struggling for work, nearly one in six living in poverty and 47 million people dependent on food stamps to feed themselves and their families. The choice in this election is clear. Under President Obama, we’ll get another four years like the last four years. If I’m elected, we will have a real recovery with pro-growth policies that will create 12 million new jobs and rising incomes for everyone.
|@ jakebeckman : Jack Welch "is now unavailable for the rest of the day in meetings." http://t.co/a8DoxdRr|
From Eamon Javers, Washington reporter for CNBC:
|@ EamonJavers : These BLS truthers (jobbers?) are starting to make the UFO people look credible. Please produce your evidence.|
From Brad DeLong, economics professor at the University of California at Berkeley:
|@ delong : You must listen to @BetseyStevenson ! The report does not say labor market jumped a lot in Sep, says LM has been stronger than we thought|
From Heidi Shierholz, economist at the Economic Policy Institute:
This is one of those months where the two surveys are telling somewhat different stories. The establishment survey (which provides the job count) shows the kind of steady but modest growth we’ve been seeing for the last two-and-a-half years – job growth that is basically just enough to keep up with growth in the potential workforce. On the other hand, the household survey (which provides the unemployment rate) was extremely positive, with a substantial drop in the unemployment rate (and furthermore, that drop was due to people getting jobs, not leaving the labor force). The rule of thumb when the two surveys tell different stories is to go with what the establishment survey says. However, the household survey provides reasons to be somewhat more optimistic about job opportunities for American workers.
|@ jakebeckman : Fox News showing grainy footage of Al Gore from Current TV. Not covering the jobs report.|
From Betsey Stevenson, economics professor at the University of Michigan:
|@ BetseyStevenson : Recap--for 21/2 years empt has been growing. The ups & downs of the empt report are more sampling error than starts & stops in job growth|
From Justin Wolfers, economics professor at the University of Michigan:
|@ justinwolfers : Remember: The unemployment rate would be under 7% if not for government job cuts. (@jdlahart: Please update your numbers!)|
From Sudeep Reddy, economics reporter at the Wall Street Journal:
|@ Reddy : Jobs under Obama: total payrolls down 61,000 since Jan 2009. Private payrolls: +514k. Govt payrolls: -575k. Jobless rate unchanged at 7.8%|
|@ Neil_Irwin : For conspiracy minded folks: The BLS bureaucrats who prepare these surveys are kept firewalled from politicos in WH and even DOL.|
|@ joebrusuelas : Ignore conspircacy theories & focus on the trend. Assuming growth at 150K per month, it's still 6 years before we get to full employment. $$|
|@ justinwolfers : Imagine what the unemployment rate would be today if Congress had passed the American Jobs Act, adding another million jobs.|
If you click over to the conservative Drudge Report, you will see a big photo of Obama and the headline: "SURPRISE: 7.8%."
Paul Ashworth, chief U.S. economist at Capital Economics, called this "an encouraging labour market report." He continued in his research note:
The decline in the unemployment rate to 7.8%, from 8.1%, was driven by a massive 873,000 jump in the alternative household survey measure of employment, which far outstripped a 418,000 rebound in the size of the labour force. Even allowing for the normal volatility in the household survey, those are big moves. It means the unemployment rate has now fallen by 0.5% in two months.
|@ justinwolfers : Today's payrolls numbers CHARTED. Squint hard: You can barely see the slowdown we were worried about. http://t.co/8vHc12wv|
|@ SimoneFoxman : Charts!!! The US economy added 114,000 jobs in September; the unemployment rate dropped to 7.8% http://t.co/A1ZraHHZ|
|@ fivethirtyeight : Bottom line: first day in a long while that Obama will be happy for everyone to talk about the economy|
1.7 million people were out of work for 99 weeks or longer in September, down from 2 million during the same period last year, according to Huffington Post unemployment reporter Arthur Delaney:
|@ ArthurDelaneyHP : Digging deep for bad news, not quite finding! 1.7 million 99ers, down from 2 million last year.|
From Sudeep Reddy, economics reporter at the Wall Street Journal:
|@ Reddy : September jobless rate for people 25+ with bachelor's degree: 4.1%. High school grads: 8.7%. Less than high school diploma: 11.3%|
|@ conorsen : State/local govt added 6k. Finally.|
|@ blakehounshell : BLS Truther movement starts today.|
|@ BetseyStevenson : The labor force grew by 418K jobs. How do Republicans spin a jobs report in which unempt falls .3 w/ more working & more in the labor force?|
|@ BetseyStevenson : The household data says that 873K more people were employed in September than in August. Unemployment fell bc A LOT more people were working|
Workers are not reaping the gains of their extra productivity.
Worker productivity grew 11 times more quickly than worker pay between 1979 and 2011: While <a href="http://stateofworkingamerica.org/fact-sheets/key-findings/" target="_blank">worker productivity rose 69 percent</a>, median hourly compensation rose just 6.5 percent, according to the Economic Policy Institute. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4u-change-total-economy/" target="_hplink">Economic Policy Institute</a>]
CEO pay has skyrocketed.
Maybe it's time to consider your CEO's massive pay package as a cut out of your own paycheck. <a href="http://stateofworkingamerica.org/wages/" target="_hplink">CEO pay is more than 200 times</a> that of a typical worker, up from 30 times that of a typical worker in the late 1970s, according to the Economic Policy Institute.
There aren't enough jobs.
At its current rate of job creation, the U.S. will not return to its pre-recession unemployment rate of around 5 percent before 2020, according to the Economic Policy Institute.
Job growth was slow even before the recession.
From the Economic Policy Institute: "The business cycle from 2000-2007 is the weakest full business cycle on record for job creation, due to the fact that demand was insufficient to drive overall GDP gains that were robust enough to generate strong job growth." It appears that the middle class squeeze has hurt job creation and economic growth.
We are poorer than we could be.
Households in the middle fifth of income distribution would have been making $18,897 more per year as of 2007 if their incomes had grown as quickly as overall average incomes between 1979 and 2007, according to the Economic Policy Institute. (The sizable income growth for top earners since 1979 skewed the overall average.)
The rich have captured most income growth.
The top one percent captured 60 percent of total income growth between 1979 and 2007, while the bottom 90 percent was left with just 9 percent of the total, according to the Economic Policy Institute. Moreover, the top one percent's incomes rose 241 percent, in contrast to 11 percent growth for the bottom fifth and 19 percent growth for the middle fifth. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-income-figure-2a-real-median-family/" target="_hplink">Economic Policy Institute</a>]
Wages have grown more quickly for the rich.
Wages for the top one percent spiked 131 percent between 1979 and 2010, while wages for the bottom 90 percent of workers rose just 15 percent over that same period, according to the Economic Policy Institute. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4h-change-real-annual-wages/" target="_hplink">Economic Policy Institute</a>]
The poorest Americans are earning less than in 1979.
Americans in the bottom tenth of the wage distribution earned less last year than the lowest earners did in 1979, accounting for inflation, according to the Economic Policy Institute. Meanwhile, the real wages of the median worker rose only 6 percent between 1979 and 2011.
The American Dream is eroding.
"Families headed by early baby boomers (born between 1945-1954) are the last generation (on average) to achieve higher living standards than the one that preceded them," the Economic Policy Institute says. Among families with incomes below $28,000 in 1994, less than 1 percent made it to the top fifth of incomes 10 years later, according to the Economic Policy Institute.
This has been a lost decade.
On average, hourly pay has not grown at all since 2002 for workers with a college degree or with only a high school degree, according to the Economic Policy Institute. Wages have not grown for college graduates in nearly every occupation, and college graduates in the 70th income percentile or lower have had stagnant or falling wages since 2000. [Chart credit: <a href="http://stateofworkingamerica.org/chart/swa-wages-figure-4a-change-total-economy/" target="_hplink">Economic Policy Institute</a>]