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U.S. unemployment rate falls to 7.8 percent, wages rise

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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.

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.

"An overall better-than-expected jobs report, consistent with most recent data that suggest the economy is gaining some momentum," said Sal Guatieri, an economist at BMO Capital Markets, 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 65 points in the first half 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."

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  • where's the beef?
    How do I keep missing the details in the article about the title's claim of "wages rise"? Yes, the liberal media is all conspiring to get Obama reelected. If Romney somehow overcomes all the odds and wins, we'll never see skeptical or dubious reports about how well the economy is doing, and we'll have full employment in no time at all. Don't vote for Obomney. Try a candidate who will actually change our government and stop letting banks and other big businesses write the laws that give them advantages over small businesses and allow them to be bailed out after acting irresponsibly and immorally while screwing the lower and middle class out of their savings. How about some discussion of Gary Johnson, a two-term governor of New Mexico? That alone provides greater experience than either Romney or Obama (pre-2008). Johnson will be on the ballot on somewhere between 47 and 50 states (pending litigation). Why is he ignored by the "liberal" media? Because it's the corporate media that knows it can control and benefit from the two-party system, but it can't control a truly independent president from a third-party that isn't dependent upon corporate bribes. The problem is the corporate media, not the liberal media.
  • At The End of The Day
    People are on food stamps because they took a job that pays 40% to 60% less than they made before the crash of October 2008. I know people who are working two or three part-time jobs because the employers will not allow them to work 40 hours, which would require some level of benefits. I see too many new cars and trucks rolling through the streets of Indianapolis for the sky to be falling. If you are really interested in a job, there are currently over four millions legitimate jobs posted on the Internet. Stop blaming Congress, the President, the Senate, and the Indiana State House. Jobs are created in the private sector, and public jobs are down 700,000 nationwide. The current numbers reflect private sector hiring. Frankly, 7.8% sucks, but the economy is doing much better than people want to admit. Just ask your friends driving those new cars.
  • Here's the Truth
    Here's a thought....this story and all of the prior comments along with mine will never be read by more than .5% of the IBJ readers. why? because the headline says all they care to read. Most Americans get their news from headlines. This is why liberal media have outlandish and misleading headlines. People will read this headline and assume that the economy is improving.
  • Ourselves to Blame
    The problem with the economy and America is we have no one to blame but ourselves. The majority of Americans will go home tonight and flip on the 'liberal' news while making dinner and will be bombarded with headlines of a falling unemployment rate and that the economy must be growing. They'll never get the facts that household incomes are falling and the jobs being created are low income and often part time. Until Americans start educating themselves and stop taking the liberal media at their word we won't be able to help ourselves.
  • Yogi
    The numbers are skewed due to the department of labor dropping numbers from work force therefore it shows les unemployment. This is a trick to give OBama a boost before the election. Another trick.
  • if anyone cares to read the truth
    http://www.newsmax.com/Headline/obama-unemployment-romney-economy/2012/10/05/id/458849 Obama and the democrats can cook the numbers any which way they choose. There's a lot more behind a single rate
  • Meanwhile.....
    unemployment rate drops, meanwhile the number of Americans on food stamps in rising drastically, now 1 in 6. The number of unemployed that have given up looking for work or run out of benefits has increased and are no longer factored in the unemployment rate, and liberals are touting this rate as a successful trend, as if anything below 8% and we're doing well. The real facts show that the rate would be closer to 11% if the same amount of people were still looking instead of given up hope as the year obama was elected. This rate was also lowered because of 'revised' numbers from July. What a coincidence coming just a month before election and days after Obama was dismantled in the first debate.

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    1. I took Bruce's comments to highlight a glaring issue when it comes to a state's image, and therefore its overall branding. An example is Michigan vs. Indiana. Michigan has done an excellent job of following through on its branding strategy around "Pure Michigan", even down to the detail of the rest stops. Since a state's branding is often targeted to visitors, it makes sense that rest stops, being that point of first impression, should be significant. It is clear that Indiana doesn't care as much about the impression it gives visitors even though our branding as the Crossroads of America does place importance on travel. Bruce's point is quite logical and accurate.

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