Breaking it Down: Unemployment Drops Below 8%

BY: ON SATURDAY, OCTOBER 06, 2012

According to the Bureau of Labor Statistics, the U.S unemployment rate has fallen to 7.8%. This is the lowest the number has been since January 2009, the same month in which President Obama was inaugurated.

Good news? Bad news? No news? The numbers are being spun every which way by talking heads, bloggers and politicians. 

What do the numbers really mean?

Unemployment and the Election

As it may come as no surprise, the news of unemployment below 8% made a big splash in the political sphere.

The timing of the news couldn't have come at a better time for the Obama campaign, hardly a day after his lackluster debate performance against Republican contender Mitt Romney. The first Presidential debate has been seen as an absolute game-changer by the GOP, with Romney holding his own against the President, who did little to contest Romney or make a clear-cut case for another four years in the White House. Romney came out of the debate looking strong and determined, however; this sub-eight percent unemployment number provides Obama with the momentum he was clearly lacking post-debate.

The numbers ultimately come as a relief to of the President, who has been cited consistently by the Romney campaign for the consecutive 40-plus months of unemployment under his administration. That albatross of that dreaded 8% number has finally been lifted for President Obama, meanwhile Romney's talking point of the infamous 8% number is now moot. But is it too little too late?

"There were fewer new jobs created this month than last month," Romney said in response to the news. "And the unemployment rate as you noted this year has come down very, very slowly, but it's come down none the less.”

Romney noted that the number of people leaving the workforce serves as a determining factor as to why the employment number has dropped.

"So it looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, why our unemployment rate would be around 11%,"

The President was naturally pleased with the news; however, kept his enthusiasm somewhat muted.

“Every month reminds us that we've still got too many of our friends and neighbors who are looking for work," Obama said at a rally in Fairfax, Virginia. "Today's news certainly is not an excuse to try to talk down the economy to score a few political points. It is a reminder that this country has come too far to turn back now."

In the end, both candidates could agree on two points. Yes, the economy is recovering. No, it's not recovering fast enough.

Breaking Down the Numbers

While the country's economy certainly is not out of the woods as it pertains to employment and job growth, there are definitely some positives we can take away from the September numbers.

  • 114,000 jobs were added to the U.S. economy in September 
  • 181,000 jobs were added in July, a jump from the previously reported 141,000 
  • 142,000 jobs were added in August, up from the previously reported 96,000 

The latter revisions in the job numbers represent a huge reason as to why the unemployment rate managed to dip below 8%.

In previous months, a significant factor for dropping unemployment was the fact that many Americans were simply leaving the workforce and giving up on potential employment. The September numbers tell a different story.

It should still be noted that over 12 million Americans are out of work, with many Americans either underemployed, looking for work or having been unemployed for over 27 weeks.

It is easy to be cynical about such numbers, although for once we can definitely say that unemployment is indeed below 7.8% and perhaps we should relish that moment. The recovery is still rather slow, of course, and yes, there is only so much we can take from the month-to-month numbers.

What About Small Businesses?

Despite the seemingly hopeful numbers, small businesses are still clouded in uncertainty. Reports such as these confirm a sense of recovery for the economy, albeit slowly. Some of the biggest issues that concern small businesses such as taxes, lending regulations and healthcare, are all tied to the results of the upcoming election. While small businesses may feel like their voices are not being heard, they certainly will have a say at the polls come November.

Entrepreneurs will be watching to see what the month prior to Election Day holds for the American economy. Regardless of where we stand politically, it may come as a comfort that the looming burden of 8% unemployment is off our country's back for the time being.

About the Author

Brent Barnhart

Brent Barnhart is a freelance content writer specializing in topics such as Internet marketing and content marketing for small businesses. His goal is to help business owners find their voices online and improve their content strategies. You can reach Brent or find out more at brentwrites.com.

Comments
comments powered by Disqus