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Unemployment Drops to Lowest Rate Since 2008

The nation's unemployment rate fell to 6.3 percent, from 6.7 percent, its lowest level since September 2008.
After a miserable winter lull, the U.S. economy is heating up.

Employers added 288,000 jobs in April, the U.S. Labor Department said Friday. That shot past consensus estimates of about 210,000 jobs for the month and raises hopes that the labor market is ready to break out. Total non-farm payroll gains for the previous two months were also revised upward by 36,000. That raised average job growth over the last three months to 238,000.

The nation's unemployment rate fell to 6.3 percent, from 6.7 percent, its lowest level since September 2008. While encouraging, the sharp decline in the jobless rate owes largely to the many people who left the work force last month. More than 800,000 Americans exited the labor force in April, reversing a large increase in participation in March.

After harsh winter weather depressed growth earlier in the year, recent signals suggest economic activity has picked up. Consumer spending rose 0.9 percent in March, the biggest increase in nearly five years. Personal income also advanced at a healthy clip.

"It is clear that many Americans headed out to the shopping mall and automobile dealerships in March after staying home and cranking up the heat for the first two months of the year," said Chris Christopher Jr., director of consumer economics with IHS Global Insight, in a client note.

Stronger consumer demand is also boosting manufacturing, which is expected to drive growth and encourage hiring in the months to come.

Most economists expect GDP to advance at least 3 percent in 2014. Although that isn't the kind of vigorous growth that would quickly restore the economy to full employment, it would likely result in a steady decline in the jobless rate.

As the economy heals, Federal Reserve officials continued this week to scale back a bond-purchase program aimed at boosting growth. The central bank's rate-setting panel said on Wednesday that labor market indicators since March "were mixed but on balance showed further improvement."

That may come as tepid comfort to the many Americans, including low-wage workers and seniors living on a budget, for whom daily economic survival remains a struggle. Nearly 10 million people also remain unemployed, the Labor Department said, with many struggling to re-enter the workforce after years of joblessness. For many, a reduction last year in food-stamp payments and the end of emergency unemployment benefits have also undermined financial security.

Meanwhile, although personal income has accelerated of late, wage growth has been uneven during the course of the recovery. Median household income in March was $53,043, slightly lower than the previous month's median of $53,435, according to Sentier Research. By comparison, in December 2007, when the Great Recession officially began, U.S. families had median income of $56,271.

But the jump in job-creation last month will raise expectations for sustained wage growth, which economists say is critical in accelerating the recovery.

(CBS News)

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