President Barack Obama's claim that his economic policies are helping put Americans back to work got a shot in the arm Friday when government data showed the nation's jobless rate dropped to the lowest level in three years.
"We have made real progress," Obama said Friday after the latest employment report was released. "Now is not the time to stop."
The government reported Friday that the job market expanded at a healthy clip in December, pushing the unemployment rate to 8.5 percent. The news followed a series of reports pointing to a broad pick-up in economic growth.
Private employers added 200,000 workers last month, the Labor Department said. It was the biggest gain in three months and a much stronger showing that the 150,000 gain economists had expected. November's jobless rate was revised up a notch to 8.7 percent, easing widespread concerns that the sharp drop from October was a one-month fluke.
With the presidential campaign gaining momentum, the data gave the White House a welcome reprieve from the grim economic data that has dogged his presidency. What Obama needs going into the election cycle is for the good news on the job front to continue or even accelerate.
"When we took over the administration, we were losing 800,000 jobs, hemorrhaging jobs, with major losses just short of a depression," said Labor Secretary Hilda Solis. "Now we see a better trajectory where we're moving in the right direction. I believe the public is supportive of the kinds of solutions that the president is talking about, but we need to do more."
Republicans wasted no time downplaying the impact of the president's economic policies.
"I can't give Washington, either Congress or the administration, any credit whatsoever," said Sen. Bob Corker, R-Tenn. "We just have not done things that need to be done. This (improvement is coming from) the private sector and its resiliency, in spite of the fact we've had very bad behavior out of Washington."
It's also far from clear that the improvement in the employment data will continue for the next 10 months. Most economic forecasters see economic growth slowing in 2012. The outlook is clouded by the ongoing debt crisis in Europe, which is expected to slip into recession even if a wider financial disaster can be averted.
The decline in the headline jobless rate could stall even if the U.S. economy continues to heal. The rate has fallen partly as a result of a decline in the official size of the workforce. If so-called "discouraged" jobless workers see better odds of getting hired, begin looking again and then get counted as having re-entered the workforce, the decline in the unemployment rate could slow or reverse course.
If that happens, Friday's upbeat news could be long forgotten by election day.
"If I were sitting in the White House, I would look for the unemployment rate to bump up a little bit now rather than the spring or summer if people are coming back into the labor force," said Matt McDonald, a Republican economic strategist.
The Obama administration used the upbeat report to prod Congress to continue policies that include extending last year's payroll tax cut and long-term unemployment insurance benefits. After deadlocking for weeks, Congress agreed in December to continue those policies for only two months.
"It is critical that we continue the economic policies that are helping us to dig our way out of the deep hole that was caused by the recession that began at the end of 2007," said White House Chief Econmist Alan Krueger.
Republican opponents argue that the cost of those policies, and the impact on the federal budget deficit, outweigh any stimulus that increased spending gives the economy. Even Obama supporters note that there's not much more the White House can do to boost growth and create jobs.
"I searched all around in the basement," said Austan Goolsbee, Obama's former chief economist. "There's not a big lever down there you can flip and get everything going."
Though the jobs numbers are moving in the right direction, most voters think the country is on the wrong track, according to the latest NBC News/Wall Street Journal poll, conducted in early December. Only 22 percent believe the county is headed in the right direction; some 69 percent told pollsters the U.S. is headed in the wrong direction.
"People are still feeling like labor market is hurting and they're right," said Stanford economist Ed Lazear, who served as chief economist for George W. Bush. "Even if things are getting better, when you're at 8.5 percent unemployment, this a very different labor market than we saw in 2007 when the unemployment rate was 4.4 percent. So it's no surprise that people still feel like the labor market is struggling even if the moves are in the right direction."