Unemployment was pushed down to 7.8 percent in September. Unemployment back to Inauguration Day level

Unemployment fell to 7.8 percent in September as the economy added 114,000 jobs, handing President Barack Obama some positive economic news as he looks to regain momentum following a lackluster debate performance this week.

Republicans have bashed Obama over persistent unemployment throughout the campaign, repeatedly reminding voters that it has hung above 8 percent for almost all of his presidency. But Friday’s figure puts unemployment back down to Inauguration Day levels.


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Using history as a guide, however, the high unemployment levels still pose a problem for the president.

No president has been reelected with unemployment above 7.2 percent since World War II — the rate when Ronald Reagan won a second term in 1984.

Obama embraced Friday’s jobs news at a speech in Virginia at George Mason University and chided Republicans for looking for a negative angle on the report.

"More Americans entered the workforce, more people are getting jobs,” he said. “Today's news is certainly not an excuse to try to talk down the economy to score a few political points.”

The dip in unemployment, however, did nothing to stem Mitt Romney’s criticism of the president’s handling of the economy.

At a speech in Abingdon, Va., Romney argued while the rate went down, “there were fewer new jobs created this month than last month.”

“I’ll tell you this — when I’m president of the United States … that unemployment rate is going to come down not because people are giving up and getting out of the work force but because there are more jobs,” he said. “I will create jobs and get America working.”

While people leaving the workforce has contributed to the rate moving lower in other months, the latest jobs report showed the amount of people participating in the labor force increased in September.

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House Republicans, including Majority Leader Eric Cantor, joined the attack.

"While today’s unemployment report offered some encouraging news, it simply isn’t good enough,” Cantor said in a statement. “Millions have given up looking for a job, and left the workforce. America needs a new direction.”

The next jobs report will come out Nov. 2, four days before voters head to the polls.

The Friday figure met most mainstream forecasts for September jobs growth, with most analysts’ predictions hovering around 115,000, but few foresaw the drop in unemployment.

The decrease in the unemployment rate appears to be driven by real economic growth, as the economy added enough jobs to drive the rate down even as more than 400,000 new people entered the labor market, according to Labor’s household jobs survey.

The household survey — Labor’s other main measure of employment — put the number of jobs added in September at 873,000. The household figure, which is used to calculate the unemployment rate, has a larger margin for error than the survey of employers.

The 114,000 figure is based on a survey of employers’ payrolls.

Labor also revised its August payroll jobs figure to 142,000 up from its initial figure of 96,000 jobs. The department released a final July figure of 181,000 up from its previous estimate of 141,000 jobs.

“This shows that the job market is steadily improving,” said Mark Zandi, chief economist of Moody’s Analytics.

White House officials were pleased with the numbers but also urged caution due to how often the figures are revised in future months and emphasized more progress needs to be made.

"It is critical that we continue the policies that are building an economy that works for the middle class as we dig our way out of the deep hole that was caused by the severe recession that began in December 2007," Alan B. Krueger, chairman of the Council of Economic Advisers, said in a statement.

Congressional Democrats again used the release of the monthly jobs report to criticize Republicans for opposing recent proposals from Obama intended to boost the economy by, among other things, providing more funding to states.

"We could be moving even faster if Republicans would drop their knee-jerk obstruction and work with Democrats," Senate Majority Leader Harry Reid said in a statement.

Former General Electric CEO Jack Welch on Twitter accused the White House of cooking the jobs numbers to boost Obama’s reelection challenges. The comments were widely panned, including by former Bush administration spokesman Tony Fratto and Obama’s former top economic adviser Austan Goolsbee.

“Stop with the dumb conspiracy theories. Good grief.” Fratto tweeted.

“Love ya jack but here you’ve lost your mind,” Goolsbee posted on Twitter.

THE NUMBERS

Of the 12.1 million unemployed workers, more than 40 percent have been looking for work for six months or more, Labor reported.

September unemployment among men fell to 7.3 percent and among women to 7 percent. Unemployment among Hispanics was unchanged at 9.9 percent and among blacks at 13.4 percent.

The economy dropped 16,000 manufacturing jobs in September.

Health care was the fastest-growing sector, adding 44,000 jobs in September — 8,000 in hospitals.

Overall, average hourly earnings rose by 7 cents in September, up to $23.58. Average hourly earnings have risen by 1.8 percent during the past year.

The stock market climbed at the opening bell, with the Dow Jones Industrial Average up about 60 points in morning trading.

MJ Lee, Seung Min Kim, Reid J. Epstein and James Hohmann contributed to this report

This article first appeared on POLITICO Pro at 8:40 a.m. on October 5, 2012.