WASHINGTON - President Barack Obama got some unwelcome news on Friday showing unemployment still stuck at 10 percent in December and that businesses had unexpectedly shed another 85,000 jobs.
The disappointing data steps up pressure on Obama to act. The White House, preoccupied in the first week after the year-end holidays by the fallout from a botched Christmas Day plane attack, is expected to now firmly switch its focus to growth and jobs.
Obama will make a statement at 2:40 p.m. EST (1940 GMT) and is expected to announce details of government funding for clean technology jobs, previously announced in the $787 billion emergency spending package that he signed in February. The White House says the initiative will support tens of thousands of clean energy jobs.
The following are some of the reasons why Obama must boost jobs, or suffer the political consequences of failure:
WHAT ARE THE POLITICS OF UNEMPLOYMENT?
Beating back unemployment will be a key yardstick by which U.S. voters will measure Obama's White House, shaping his ambitious legislative agenda and going a long way to determining his own long-term political future.
Opinion polls consistently find American households anxious about job security. So his failure to tackle this issue will cloud any victory that Obama can claim on healthcare, financial regulatory reform, climate change or the prosecution of wars in Iraq and Afghanistan.
In addition, these goals will themselves be harder to reach unless the White House can translate an economic recovery into an engine for job creation.
Obama's popularity has already drifted down to around 50 percent as the jobless rate has climbed. This is likely to mean his Democratic Party will suffer in November mid-term congressional elections, when the party in power traditionally loses ground, unless the White House convincingly turns this trend around.
HOW DOES THE JOBLESS RATE IMPACT CONGRESS?
A reduced majority will make it even harder for Obama to push his reform agenda through Congress. Weak party discipline has already complicated that task, despite a solid Democratic majority in the House of Representatives and 58 Senate seats, plus two independents who usually vote with the Democrats. This gives Senate Democrats 60 votes, which is enough to thwart procedural delaying tactics by the Republican party opposition -- provided everyone votes the party line.
In addition, the highest unemployment levels in 26 years are putting a serious drain on the country's budget, costing hundreds of billions of dollars in social safety-net payments and in lost income tax revenue. With Obama pledged to bringing down the budget deficit, which hit a record $1.4 trillion in fiscal 2009, failure to get people back to work will make everything else harder, including honoring his promise not to raise taxes on U.S. families making less than $250,000 a year.
WHY DO JOBS LAG GROWTH?
Obama has managed to get the U.S. economy growing again, with a tremendous amount of help from the Federal Reserve's ultra-low interest rates and other expansionary monetary policy measures. The economy expanded at a 2.2 percent annualized clip in the third quarter and is forecast to grow by more than 4 percent in the fourth.
However, companies remain reluctant to hire, either because they don't yet trust the sustainability of the recovery, or because economic conditions are still very weak. Instead of hiring, firms are meeting stronger demand by squeezing more output from their existing workforce.
This has promoted surging productivity growth, which helped to underwrite major U.S. stock markets gains last year as investors bet on higher corporate profits. But none of that will matter unless unemployment starts to retreat, which must happen in order to restore household confidence and consumer spending and secure a sustainable economic upswing that endures after official stimulus efforts expire or are withdrawn.
(Reporting by Alister Bull; Editing by David Alexander and Eric Walsh)