Job creation pace is slow, but gains are piling up

— -- The Department of Labor's monthly jobs report landed with a thud three months ago. The economy added no jobs in August. None.

That report turned out to be wrong. More than 100,000 jobs were added in August, later estimates showed. And three months later, a positive trend is clear. More than 500,000 jobs have been added in four months, and talk of a double-dip recession has largely disappeared.

"It was heartening to see that we continued to see private-sector job creation, 21 months in a row," says Brian Deese, deputy director of the White House National Economic Council. "But at the same time, the pace of job creation isn't sufficient. We need to increase the pace."

So is the economy finally out of the woods? Not so fast.

The major hurdle still to be surmounted lies in Europe, where government leaders will meet later this week in an effort to firm up a rescue plan for debt-ridden economies. Vice President Biden is in Greece, the epicenter of the crisis; Treasury Secretary Timothy Geithner travels to Germany, France and Italy midweek.

The fear is that a European recession would have a contagious effect on financial markets.

The other immediate hurdle: extending a payroll tax cut for millions of families and unemployment insurance for many of the 13.3 million people still looking for work. President Obama will visit Osawatomie, Kan., on Tuesday to make his latest pitch where Theodore Roosevelt called for "equality of opportunity" in 1910.

Friday's jobs report indicating the nation's jobless rate dropped from 9% in October to 8.6% in November was a welcome sign. Combined with revisions to earlier monthly reports, it showed a gain of 534,000 jobs in four months and 2.5 million since hitting a low point February 2010, and marked 21 months in a row of private-sector job growth.

Perhaps as significant as November's 120,000-job gain are the recent revisions for earlier months: August from zero to 104,000 new jobs, September from 103,000 to 210,000, and October from 80,000 to 100,000, with one more revision still to come.

"That usually shows there's a little momentum," says Jared Bernstein, until recently Biden's top economic adviser. "And that's why you worry so much about anything that could block that momentum."

The jobs report wasn't all rosy. State and local governments continued to shed jobs, totaling 600,000 since the second half of 2008.

The mismatch between jobs created and the jobless rate decline indicated that some 315,000 people stopped looking for work. If they return, the jobless rate could rise.

Still, Republican economic adviser Douglas Holtz-Eakin sees a silver lining: More people are quitting the workforce than getting laid off.

"That's a good-news story: People are confident enough to quit," he says. "I think the only way we get a double dip is a real serious European meltdown."