WASHINGTON (Reuters)-  A worrisome drop in the size of the U.S. workforce means that even with a big decline in the unemployment rate in November, it's still not time to break out the champagne.

U.S. employers added 120,000 new jobs to payrolls last month and the jobless rate fell to 8.6 percent, its lowest since March 2009, the government said on Friday.

The pace of job creation marked an acceleration from October, and the government also revised up its job counts for September and October.

Following are some key details from the report:

* The fall in the unemployment rate was aided by 315,000 people leaving the workforce. That pushed the participation rate, a ratio of the amount of the population in the labor force, down to 64.0 percent. Those who exited the workforce, many of whom gave up on looking for work, outnumbered the 278,000 people who found jobs, according the Labor Department's household survey, which is separate from payrolls data.

* Job creation is not spreading as widely into different sectors of the economy. The "diffusion index" for private payrolls fell sharply to 54.7 in November from a downwardly revised 59.6 the previous month. That's the lowest since September 2010. A reading above 50 means more industries are increasing employment than decreasing employment.

* The pace of job creation was close to the consensus forecast of economists. Coupled with the upward revisions to September and October totaling 72,000 jobs, the report suggested the economy was gathering some momentum.

* Government payrolls dropped 20,000 in November. Belt tightening by state and local governments has been dragging on the economy since the recession.

* But in a more positive sign, the "Black Friday" phenomenon which fueled a boom in early holiday shopping last month coincided with retailers boosting hiring substantially to handle the demand. Retailers added 49,800 new jobs to payrolls after seasonal adjustments.

* Factories added 2,000 workers to payrolls, which was fewer than expected but still shows U.S. manufacturers bucking the global economic downturn.

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To read the entire story, visit www.Reuters.com.

By Vicki Needham - The Hill

First-time jobless claims increased unexpectedly for the second straight week as the labor market continues its choppy and slow recovery.

Weekly applications for unemployment benefits rose by 6,000 for the week ended Nov. 26 to a seasonally adjusted 402,000, from the previous week's revised figure of 396,000, the first jump above 400,000 in three weeks, the Labor Department said Thursday.

The four-week average, a less volatile measure than the weekly figure, was about the same as last week, 395,750, an increase of 500 from the previous week's revised average of 395,250.

Jobless claims have been steadily declining for the past two months and they hit a seven-month low two weeks ago even has employers remain reluctant to hire.

The report comes on the eve of the release of the Labor Department's November figures — which are projected by economists to come in at around a net increase of 125,000 with the unemployment rate staying at 9 percent.

The economy added only 80,000 jobs in October but August and September figures were revised upward to show solid gains.

ADP released a report on Wednesday showing a montly gain of 206,000 private-sector jobs — governments have been cutting jobs, dragging the overall number down.

Economists suggest that claims need to fall below 375,000 before the job market can be considered healthy — applications fell to 375,000 in February and stayed below 400,000 for two months, before hitting an eight-month high of 478,000 in April.

Meanwhile, there are other positive signs of the economy's recovery although it remains sluggish.

Retailers had a record start to the holiday retail spending season with record sales in stores and online while consumer confidence rose in November.

Consumer spending represents 70 percent of economic activity and is a key factor to accelerating the recovery.

The number of people continuing to receive jobless benefits for the week ended Nov. 19 increaesd by 35,000 to 3.74 million, the Labor Department said.

Those who have used up their 26 weeks of state benefits and are now collecting federal emergency and extended payments increased by about 69,500 to 3.52 million in the week ended Nov. 12.

The total number of people claiming benefits in all programs for the week ending Nov. 12 was just more than 7 million, an increase of 276,832 from the previous week.

While Congress considers an extension of unemployment benefits and expanded payroll tax cut along with other initiatives, Europe continues to weigh on the U.S. and global economic recovery.

House and Senate Democrats are pressing for another yearlong extension of federal benefits before they expire Dec. 31. The Labor Department estimates about 2 million people will lose benefits by mid-February if the program isn't extended and argue that it will lead to more job losses and leave struggling workers without any help while they job hunt.

The Federal Reserve and other global central banks announced a coordinated effort on Wednesday to boost the financial system by making it easier for banks across the world to trade in U.S. dollars. The step is the most dramatic effort taken by the Fed to contain a European debt crisis that threatens to spark a global recession.

Economists are concerned that Europe is headed for, or might possibly already be in, a recession.

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To read the full story, visit www.TheHill.com.

ABC News’ John Parkinson and Elizabeth Hartfield report:

As members of Congress returned to their districts last week to enjoy the Thanksgiving holiday, two Democrats in the House of Representatives decided this weekend that they’d prefer spending more time at home.

Today, Rep. Barney Frank, a 16-term Democrat from Massachusetts, announced that he will not seek a 17^th term in the House. On Saturday, Rep. Charles Gonzalez, a seven-term Democrat from Texas, decided to hang it up too.

But with these two retirements from historically dark blue Democratic districts, neither side is any closer to a majority. Even Republican sources concede Frank leaves “a pretty solid [Democrat] seat” that President Obama won with 61 percent of the vote in 2008, and Sen. John Kerry won with 62 percent in 2004.

Republicans currently hold a 242-192 advantage in the 435-seat House of Representatives. One vacancy, created by the resignation of Oregon Democrat David Wu, leaves the magic number at 26 for Democrats to take back the gavel for Minority Leader Nancy Pelosi.

In the 2006 midterm elections, when a Democratic wave propelled Pelosi to the speakership, 22 Republicans saw the writing on the wall and retired.

While it’s still almost a year until the 2012 midterm election, so far 17 Democrats have notified Pelosi that they will not be on the ballot to defend their congressional seats next November.

Democrats Retiring:

Dan Boren (D-Okla.)
Dennis Cardoza (D-Calif.)
Jerry Costello (D-Ill.)
Barney Frank (D-Mass.)
Charlie Gonzalez (D-Texas)
Dale Kildee (D-Mich.)
John Olver (D-Mass.)
Mike Ross (D-Ark.)
Lynn Woolsey (D-Calif.)

Democrats running for other office:

Bob Filner (D-Calif.)
Jay Inslee (D-Wash.)

Democrats running for Senate:

Tammy Baldwin (D-Wis.)
Shelley Berkley (D-Nev.)
Joe Donnelly (D-Ind.)
Martin Heinrich (D-N.M.)
Mazie Hirono (D-Hawaii)
Christopher Murphy (D-Conn.)

Republicans running for other office:

Mike Pence (R-Ind.)
Ron Paul (R-Texas)*
Michele Bachmann (R-Minn.)*

Republicans running for Senate:

Denny Rehberg (R-Mont.)
Jeff Flake (R-Ariz.)
Todd Akin (R-Missouri)
Connie Mack IV (R-Fla.)
Rick Berg (R-N.D.)

Though the two most recently announced retirees, Frank and Gonzalez, hail from Democratic strongholds, it’s worth noting that this is not the case for all of the departing House Dems.

In Oklahoma for example, Democratic Rep. Dan Boren, who represents the states’ second district, will retire. The district has gone red in the past three Presidential elections. Most recently, McCain defeated Obama 66 percent-34 percent in 2008.

In Indiana, House Democrat Joe Donnelly is vacating his seat to run for Senate. In 2010 Donnelly narrowly defeated Republican challenger Jackie Walorski, 48.2 percent to Walorski’s 46.8. The district went blue for Obama in 2008, but George W. Bush carried the district in 2000 and again in 2004.

The nine House Democrats who have announced their retirement have a combined 88 terms between then, totaling 176 years of service to the United States House of Representatives.

*Rep. Ron Paul is currently running for president and has announced he will retire at the end of the 2012 cycle.

*Rep. Michele Bachmann is currently running for president and has not announced her plans beyond the Republican primaries.

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For more, visit www.ABCNews.com.

By Julian Pecquet - The Hill

The Obama administration on Monday rejected two states’ requests for waivers from the healthcare reform law.

The decision could rekindle the controversy over the waiver process, as the two states that were turned down, Indiana and Louisiana, have Republican governors. GOP leaders at the state level have been extremely critical of the healthcare law and the requirements that it imposes on states.

The Department of Health and Human Services said Indiana and Louisiana do not need an adjustment from the health law's medical loss ratio. That provision requires insurers to spend at least 80 percent of premiums on medical care or offer rebates to their customers starting next year.

HHS can grant a temporary waiver if regulators determine that the requirement looks likely to destabilize a state's individual health insurance market.

The agency determined that the health plans of Indiana and Louisiana can meet the threshold and that consumers will get better value without an adjustment, said Gary Cohen, acting director of oversight at the HHS Center for Consumer Information and Insurance Oversight.

Indiana had asked for a 65 percent ratio in 2011; 68.75 percent in 2012; and 72.5 percent for 2013. Cohen said the state's health plans did not need the adjustment because they're either already meeting the 80 percent threshold, could meet it without becoming unprofitable or are already changing their business model to be able to meet it.

Louisiana had asked for a 70 percent threshold in 2011 and 75 percent in 2012. HHS said that request was based on preliminary data showing that the aggregate medical loss ratio among nondominant plans was 67 percent for 2010, while updated figures showed that figure to be 79 percent.

Indiana had also requested an adjustment of 76.25 percent for 2014, a permanent waiver for high-deductible "consumer-driven" health plans in the individual and small group markets, and a waiver for new individual market entrants until 2014. HHS said it does not have the authority to grant such waivers.

The state's broad request had sparked outrage among consumer advocates.

"Indiana's application is based on state politicians' ideological opposition to health reform, not the realities of the state's health care market," Consumer Watchdog wrote in public comments urging HHS Secretary Kathleen Sebelius to reject the application. "As the MLR regulations make clear, there must be a credible threat to the stability of the individual marketplace in order to grant a waiver. Indiana has demonstrated no such threat."

The state, however, says it needs a special exemption for high-deductible healthcare plans because they're a growing segment of the insurance market among employers searching for options to clamp down on costs. Indiana has the fifth highest percentage of workers in such plans (8.1 percent of the population, or 365,000 people).

"In particular," the state's application points out, "73 percent of Indiana's nearly 29,000 state employees (excluding public university employees) participate" in such plans.

To date, HHS has granted waivers to seven states: Maine, New Hampshire, Kentucky, Nevada, Iowa, Georgia and Wisconsin. The department has denied them to Delaware and North Dakota.

The department is currently reviewing applications from six other states: Florida, Kansas, Michigan, Texas, Oklahoma and North Carolina.

Guam had also applied for a waiver, but HHS determined the U.S. territory's insurers were so small they don't have to comply with the new rules.

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To read more, visit www.TheHill.com

By Stephen Dinan - The Washington Times

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.

All told, the stimulus did boost jobs and the economy in the short run, according to CBO’s models. At the peak of spending from July through September 2010, it sustained anywhere from 700,000 to 3.6 million, which lowered the unemployment rate by between four-tenths of a percent to 2 percent.

The Obama administration had promised 3.5 million jobs would be produced at the peak of spending.

For this current quarter CBO said the stimulus is sustaining between 600,000 and 1.8 million jobs, which has improved the unemployment rate by as much as 1 percent versus what it otherwise would have been.

The White House did not return a message seeking comment Tuesday afternoon, but officials there previously have said the Recovery Act stopped the economy from falling into another Great Depression.

“The point is, what is uncontestable is that those infrastructure projects that were funded by the Recovery Act were very well managed, came in on budget or under budget and led to the creation of many, many jobs by an outside, independent analyst” White House press secretary Jay Carney said in September, as Mr. Obama was proposing another round of stimulus spending.

That new proposal called for $447 billion in expanded tax breaks, additional aid to states to hire teachers and emergency workers, and more infrastructure spending.

That broad effort has stalled, though on Monday Mr. Obama signed a slim portion of the package that offers tax breaks to businesses that hire veterans, and that repeals a 3 percent contract withholding requirement for government contractors.

On Tuesday, top House Democratic leaders sent a letter to House Speaker John A. Boehner urging support for the extension of unemployment benefits, last year’s payroll tax cut and higher payments to doctors who treat Medicare patients before they all expire at the end of this year.

“Independent economists from across the political spectrum estimate that failure to pass these essential pieces of legislation could reduce economic growth by much as 2 percentage points next year,” the leaders, including top House Democrat Rep. Nancy Pelosi and her two chief lieutenants, said.

CBO has re-evaluated the stimulus every three months, and its estimates for the total cost have varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and is now projected to be $825 billion once all the money is paid out.

The nonpartisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

CBO said it has concluded there is less of an indirect multiplier effect of federal spending.

Those changes caused it to drop its estimates for total employment sustained by the spending in 2011 from between 1.2 million and 3.7 million down to between 600,000 and 3.6 million.

As for the long-term situation, CBO said its basic assumption is that each dollar of additional federal debt crowds out about a third of a dollar’s worth of private domestic capital.

CBO said there is no crowding out in the short term, which is why the Recovery Act boosts the economy in the near term.

To read the full article, visit www.washingtontimes.com.

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The Washington Times: http://www.washingtontimes.com/news/2011/nov/22/cbo-stimulus-hurts-economy-long-run/?page=all#pagebreak