U.S. employment barely grew in November and the jobless rate unexpectedly jumped to a seven-month high, hardening views the Federal Reserve would stick to its $600 billion plan to shore up the fragile recovery.
“I would have expected the unemployment rate to tick up…just because Americans who had been discouraged are now back in the workforce because they’re more optimistic about finding a job,” said Bernard Baumohl, managing director and chief global economist, The Economic Outlook Group, Princeton, New Jersey.
Concerns about joblessness and low inflation led to the U.S. central bank’s decision last month to launch its now much-criticized second round of quantitative easing, known as QE2 in financial markets.
The purchases are designed to push already low interest rates down further to stimulate demand.
Fed officials are not the only ones worried about unemployment. The health of the labor market could determine whether President Barack Obama gets a second term in office in 2012.
Disgruntlement over jobs cost the Democratic Party control of the House of Representatives in last month’s midterm elections, setting the stage for a battle over economic policy with Republicans.