Unemployment rose and job creation slumped in November, according to a Labor Department report that fueled debate about whether tax cuts, more stimulus or a combination would be the best remedy for a sick but recovering economy.
Unemployment rose to 9.8 percent last month, up from 9.6 percent in October, officials said Friday.
At the same time, employers added just 39,000 payroll jobs, down sharply from 172,000 in October.
Wall Street, though initially flustered by the disappointment, ended the day higher - shrugging off the fact that 15 million Americans remain out of work in the worst spell of joblessness since Charlie Chaplin portrayed a vagabond forced to eat boot leather for dinner.
Republicans, flexing their new electoral muscle, said the report bolstered their case that all of the Bush era tax cuts should be continued.
"It's clear to everyone that the last thing Washington should be doing right now is raising taxes," House Republican Leader John Boehner said in a statement adding, "everyone, that is, except Democrats in Washington."
The White House, which wants to let the cuts expire for Americans earning more than $250,000, has urged Congress to continue funding unemployment benefits for up to 99 weeks instead of the regular 26 weeks.
"Failure to do this would ... leave millions of Americans, who are out of work through no fault of their own, on their own," said Austan Goolsbee, chair of Obama's Council of Economic Advisers, in a statement issued Friday.
Congress to decide
Authority to pay those extended benefits expired last week. About 450,000 jobless Californians, currently getting an average of $300 a week, will lose benefits by the end of December unless Congress reauthorizes the program.
To maintain the extended benefits in 2011 would cost about $50 billion. To extend the Bush tax cuts for the top 2 percent would cost about $70 billion next year.
Now Congress must decide what combination of tax cuts and/or unemployment spending offers the most economic stimulus with the least effect on the growing federal budget deficit.
A typical cycle
Some economists warned against overreaction to Friday's report.
"Let's not get too upset and start believing the upturn is faltering," said national economic forecaster Joel Naroff.
For one thing, the unemployment rate typically rises during the early stages of recovery because of how the statistics are gathered - through a survey that asks people whether they have looked for work.
During the worst of a recession, millions quit looking and fall out of the calculation. But as jobs growth resumes, however weakly, many of those who had been on the sidelines get back into the hunt, and boost the rate.
Sung Won Sohn, an economics professor at California State University Channel Islands, said Friday's figures suggest the economy is still coming back, though slowly.
"In the past, the economy grew as much as 7 percent during the first year of economic recovery," he said. "This time around, the growth rate is likely to be below 3 percent."
Bill Greenblatt, chief executive of Sterling Infosystems, a multinational firm that helps top corporations screen employees, said his business has increased strongly in recent months and, after 35 years in the business, his instincts say the hiring light has started to blink.
"A year ago this time most people were holding on to jobs, and very few people were quitting," he said. "Now you've got churn. People are leaving and being replaced. That's what gets things going again."
E-mail Tom Abate at tabate@sfchronicle.com.
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