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Despite a late October wallop from Superstorm Sandy and Washington?s ongoing pummeling of business and consumer confidence, the U.S. economy isn?t down for the count.
The fiscal cliff, though, could still deliver a knockout punch.
The unemployment rate dropped to 7.7 percent in November, the lowest in four years, as the U.S. economy generated a stronger-than-expected 146,000 jobs, the Labor Department said Friday.
??It looks like the job market is holding firm,? said Mark Zandi, chief economist at Moody?s Analytics. ?That?s encouraging in light of all the fiscal uncertainties.?
The strength in the number of jobs created was offset somewhat by a drop in the size of the work?force -- hence the decline in the jobless rate -- as people gave up looking for employment. That's a warning sign for the economy.
Economists had expected non-farm payrolls to rise about 93,000 and the jobless rate to hold steady at 7.9 percent.
The government said the storm, which slammed the densely populated East Coast did not have substantive effect on employment last month.
"Our analysis leads us to conclude that Hurricane Sandy did not substantively impact the national employment and unemployment estimates for November," said John Galvin, acting commissioner at the Bureau of Labor Statistics.
But analysts noted that the report may be revised in coming months as more complete data is available. The mid-month government survey may have missed some Northeast households still displaced by the superstorm. Friday?s report included revisions to both the September and October data showing that 49,000 fewer jobs were created than first reported.
Analysts say the latest monthly jobs data is one more sign that the U.S. economy is holding its own after four years of the weakest recovery from a?recession in half a century.?
"Pent-up demand is forcing the housing market higher, pent-up demand is forcing the vehicle market higher. consumer finances are very much improved, said David Kelly,?chief global strategist at?JP Morgan Funds. "Everything is actually pretty primed here.?It?s still a 2 percent economy but it has the potential to do more than that if we can reduce the amount of uncertainty in Washington."
Sandy washed away job market? gains
Given the ongoing political gamesmanship over a two-year budget battle, that may be a tall order. Congressional Republicans and White House officials continue to spar over competing plans to head off a looming half-trillion-dollar package of tax hikes and spending cuts that could send the recovery back into recession.
The uncertainty stems from a variety of scenarios that could unfold well into next year, including another debilitating Congressional debate over raising the government?s borrowing authority. Last July?s battle over the debt ceiling that left the Treasury within days of default was resolved by the agreement that produced the fiscal cliff package. The government is expected to reach its current borrowing limit sometime early next year. ?
?The worst outcome would, of course, be complete stalemate, so that we go off the fiscal cliff and hit the ground hard," said Nigel Gault of?IHS Global Insight. "The resulting fiscal contraction???worth around 3.8 percent?of GDP???would be sufficient to drive the economy back into recession."
To help offset to contraction of money flowing through the system, the Federal Reserve, meanwhile, has its foot hard on its accelerator, pumping new cash into the economy at the rate of $40 billion a month. Fed officials launched the latest round of pump-priming in September, saying the economy isn?t making jobs fast enough. Lower rates on home mortgages have allowed millions of Americans to refinance their mortgages, cutting their money payments and pumping more cash into household budgets.
Fed policymakers meet on Tuesday and Wednesday next week and aren?t expected to change course, given the ongoing threat of the budget stalemate
"The Fed will want to do what it can to keep monetary policy easy. They would not want to do anything right now that would be a monetary tightening," said Jerry Webman, chief economist at Oppenheimer Funds in New York.
Reuters contributed to this report.
Source: http://www.nbcnews.com/business/economywatch/unemployment-rate-drops-lowest-four-years-1C7488578
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