unemployment

Job Growth Steady, but Unemployment Rises to 7.9%

by CATHERINE RAMPELL, The New York Times  |  published on February 4, 2013

Political gridlock over fiscal policy didn’t push the economy off a cliff. But it certainly isn’t helping anything, either.

Despite the chaos and uncertainty hovering over tax rates and government budget cuts at the turn of the year, job growth accelerated at the end of 2012 and was even faster than originally estimated, the Labor Department said on Friday. Job growth also continued at a steady if modest pace in January, with employers adding 157,000 payroll positions, though the unemployment rate ticked up to 7.9 percent.

Better readings on construction spending, manufacturing and consumer sentiment released on Friday also allayed fears that had arisen from a sour report on the nation’s economic growth earlier in the week.

The upward revisions to job growth, in particular, encouraged traders on Wall Street, sending the Dow Jones industrial average over 14,000 for the first time since 2007.

“The economy, sales, employment and the stock market are all higher in spite of the bickering and rancor in Washington,” said Bernard Baumohl, the chief global economist at the Economic Outlook Group. The latest numbers “all point to an economy that is building steam and a private sector that seems almost dismissive to the sequestration and debt ceiling threats from Washington.”

Still, job growth has been modest compared with previous recoveries, and the unemployment rate has been stuck just below 8 percent since September. And Washington is gearing up for yet another showdown over fiscal policy, with severe spending cuts kicking in on March 1 if Congress fails to reach a budget bargain, just as Americans are starting to notice the larger tax bite in their paychecks from higher payroll and income taxes.

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