November's non-farm payrolls rose by a meager 39,000, way below the consensus forecast of 150,000.
The data paints a poor picture of the jobs market, shocked economists, halted the stock market's rally, and will push Congress to extend both unemployment insurance benefits and all of the Bush tax cuts, according to Diane Swonk, chief economist at Mesirow Financial.
I fully expect today's data to push Congress to extend unemployment benefits, along with all of the Bush tax cuts, in the coming weeks, she said.
The tax cuts and unemployment benefits are both a form of fiscal stimulus, meaning they will likely increase GDP growth but add to the government's deficit. Some critics argue the U.S. public debt is too high and the government therefore cannot afford more fiscal stimulus.
However, Swonk said the government can't afford not to [extend these benefits], at this stage of the game.
The deficit would significantly worsen if the economy slipped back into a recession, she explained.
Politicians may also be seizing this poor jobs report to push their agenda.
U.S. Congressman Mike Pence, an Indiana Republican, said it should be yet another wake-up call to Democrats that raising taxes in the middle of the worst economy in 25 years is a mistake.
Higher taxes on America's small businesses won’t get anyone hired. I call on Washington Democrats to abandon their plan to raise taxes on small businesses and get America back to work, said Pence.
Republicans want the tax cuts. Meanwhile, Democrats want the extension of unemployment benefits. According to the Washington Post, the two parties are negotiating and Democrats may be willing to extend the tax cuts in exchange for Republicans agreeing to extend unemployment insurance.
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