The U.S. unemployment rate fell to its lowest level in four years, indicating Friday that employers are confident about the economy despite the fiscal austerity triggered by higher taxes and deep government spending cuts.
The rate dropped to 7.7 percent as employers added 236,000 jobs in February.
The jobless rate is now at its lowest since President Barack Obama entered office.
The upbeat report fits with other big economic news of recent days, including surging stock prices and steady home price increases that have finally allowed Americans to regain the $16 trillion in wealth they lost to the Great Recession. Job growth has averaged more than 200,000 a month since November.
Stock futures rose on the report, putting the Dow Jones industrial average on track for a fourth straight record close.
Still, White House economist Alan Krueger noted in a statement that the new unemployment rate was measured before $85 billion in automatic budget cuts started taking effect. The administration has warned that the cuts could have a negative impact on employment and economic growth.
The jobless rate had been stuck at 7.8 percent or above since September. The rate declined last month because the number of unemployed fell 300,000 to just over 12 million, the fewest since December 2008. More than half the decline occurred because 170,000 of the unemployed found jobs. Another 130,000 gave up on their job searches. People who aren’t looking for jobs aren’t counted as unemployed.
The unemployment is calculated from a survey of households, while the job gains come from a survey of employers.
Employers added slightly fewer jobs in January than the government had first estimated. Job gains were lowered to 119,000 from an initially estimated 157,000. Still, December hiring was a little better than first thought, with 219,000 jobs added instead of 196,000.
Robust auto sales and a steady housing recovery are spurring more hiring, which could trigger more consumer spending and stronger economic growth. The construction industry added 48,000 in February and has added 151,000 since September. Manufacturing has gained 14,000 last month and 39,000 since November.
Retailers added 24,000 jobs, a sign that they expect healthy consumer spending in the coming months. Education and health services gained 24,000. And the information industry, which includes publishing, telecommunications and film, added 20,000, mostly in the movie industry.
The economy is also benefiting from the Federal Reserve’s efforts to keep interest rates low. Lower rates have made it easier for Americans to afford new homes and cars. The Fed has said it will keep the benchmark rate that it controls near zero until unemployment has fallen to 6.5 percent, as long as inflation remains in check.
“This may not yet be the substantial improvement in the labor market outlook that the Fed is looking for, but it’s moving in the right direction,” Paul Ashworth, an economist at Capital Economics, said in a note to clients.
So far, higher gas prices and a Jan. 1 increase in Social Security taxes haven’t caused Americans to sharply cut back on spending.
Across-the-board government spending cuts also kicked in March 1 after the White House and Congress failed to reach a deal to avoid them. Those cuts will likely lead to furloughs and layoffs in coming weeks.
The Congressional Budget office has estimated that the cuts mean government spending will drop $44 billion in the budget year that ends Sept. 30. That reduction, slightly more than 1 percent of federal spending, will likely hold down hiring in spring and summer, Ryan Sweet, a senior economist at Moody’s Analytics, said. But more hiring and pay increases now should ease the blow.
Hourly wages rose 4 cents to $23.82 last month. Wages have risen 2.1 percent in the past year, slightly ahead of inflation.
A big source of strength has also been home sales and residential construction: New-home sales jumped 16 percent in January to the highest level since July 2008. And builders started work on the most homes last year since 2008.
Home prices rose by the most in more than six years in the 12 months that ended in January. Higher prices tend to make homeowners feel wealthier and more likely to spend.
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