U.S. Job Losses in December Dim Hopes for Quick Upswing
The American economy lost another 85,000 jobs in December and the unemployment rate remained at 10 percent, setting back hopes for a swift recovery from the worst downturn since the Great Depression.
The latest monthly snapshot of the national job market released by the Labor Department on Friday provided one potentially encouraging milestone: Data for November was revised to show that the economy gained 4,000 net jobs that month, in contrast to initial reports showing a loss of 11,000 jobs. That was the first monthly improvement since the recession began two years ago.
But the December data failed to repeat the trend, and the report disappointed economists who had generally been expecting a decline of perhaps 10,000 jobs.
The report broadly confirmed that while the pace of job market deterioration declined markedly in recent months, companies remained reluctant to hire, heightening the likelihood that scarce paychecks would remain a dominant feature of American life for many months.
“We’re still losing jobs,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “It’s nothing like we had in the free fall of last winter, but we’re not about to turn around. We’re still looking at a really weak economy.”
The report intensified pressure on the Obama administration to show progress for the $787 million spending bill it championed last year to stimulate the economy. In recent months, the administration has emphasized initiatives aimed at encouraging jobs, knowing that concerns about the federal deficit limit its ability to pursue further spending.
Mr. Obama said Friday afternoon that December report showed that the “road to recovery is never straight."
“In November we saw the first gain in jobs in nearly two years,” the president said. “Last month, however, we slipped back, losing more jobs than we gained, though the overall trend of job loss is still pointing in the right direction.”
Some economists fixed on a potentially positive trend tucked within the data: for a fifth consecutive month, temporary help services expanded, adding 47,000 positions in December. The increase buttressed the notion that companies were recognizing fresh opportunities and were inclined to add labor, even as they held off on hiring full-time workers.
“We’re going in the right direction,” said Michael T. Darda, chief economist at MKM Partners, a research and trading firm in Greenwich, Conn. “If we just have a little bit of patience, we’ll start to see monthly increases of 200,000 to 300,000 jobs within six months.”
But in millions of households still grappling with the bite of a wrenching downturn, patience has long been exhausted — along with savings, credit and cash to pay the bills.
In Charlotte, N.C., Kumar G. Navile, 33, has applied for 500 positions across the country since he lost his job as an engineer a year ago. Each month, he finds himself about $600 short in his monthly expenses after the $1,680 he secures in unemployment benefits. He pays the difference from a savings account, but expects that money to dry up in the next two months.
“You get up every day and say today will be different, but it is mentally challenging when you don’t find opportunities,” Mr. Navile said. “I performed well in school. I got a job the day I graduated. It’s been a struggle, and it continues to be.”
For those out of work, the market is bleaker than ever. Unemployed people had been jobless for an average of 29 weeks in December, the longest duration since the government began tracking such data in 1948. Roughly 4 in 10 unemployed workers had been jobless for six months or longer.
In recent weeks, the number of new claims for unemployment insurance benefits has tailed off sharply. But the persistence of double-digit unemployment underscored that companies remain unwilling to add payroll.
“There is almost no hiring going on outside the temporary help sector,” said Andrew Stettner, deputy director of the National Employment Law Project. “Just slowing layoffs is not enough to produce jobs.”
Indeed, even as temporary workers increased, the average workweek for rank-and-file employees — roughly 80 percent of the work force — was essentially unchanged in December, at 33.2 hours.
Amid the usual parsing of data that accompanies the monthly jobs report, the spinning of forecasts and dueling outlooks, no complexity cloaked the simple fact that employment remains scarce. Experts assume the economy needs to add about 100,000 jobs a month just to keep pace with new people entering the work force.
“There’s really no dynamism in this economy,” Mr. Baker said. “Most people, they’re not looking at the data. They’re just asking, ‘Can I get a job?’ And that’s not getting any easier.”
The government’s monthly jobs report is always important, yet in recent times it has emerged as the crucial indicator of economic health.
For years, ordinary households have spent in excess of incomes by borrowing against the value of homes, leaning on credit cards and tapping stock portfolios. But home prices have plummeted in much of the country. Stock holdings have diminished. Nervous banks have sliced credit even for healthy borrowers. That has left the paycheck as the primary source of household finance in an economy in which consumer spending comprises roughly 70 percent of all activity.
Economists have grown increasingly divided over the nation’s economic prospects. Some argue that recent expansion on the American factory floor presages broader economic improvement that will eventually deliver large numbers of jobs.
The December report failed to deliver clear evidence for that scenario, even as it saw the pace of job losses continue to slow. Construction lost another 53,000 jobs and manufacturing saw 27,000 positions disappear. Despite a surprisingly strong holiday shopping season, retail trade gave up 10,000 jobs in December.
Health care remained a rare bright spot, expanding by 22,000 jobs.
Skeptics argue that the factory expansion merely reflects a rebuilding of inventories after many businesses slashed stocks during the panic that accompanied the fall of prominent financial institutions such as Lehman Brothers in the fall of 2008. Expansion has also been aided by $787 billion in federal spending aimed at stimulating economic growth, and by tax credits for homebuyers.
Once these factors fade in coming months, skeptics argue, the economy will confront the same challenges that have dogged it for more than two years — strapped households fretting about debts and weak job prospects, curtailing spending; banks still worrying about losses to come on mortgage holdings, reluctant to lend; businesses unwilling to hire.
Those with the gloomiest outlooks envision a so-called double dip recession, in which the economy resumes contracting. Others fear years of stagnant growth much like Japan’s Lost Decade in the 1990s.
The one point of agreement among economists is that the nation cannot recover without millions of new jobs. Workers must gain fresh wages they can spend at other businesses, creating jobs for other workers — a virtuous cycle, in the parlance of economists.
Recent months have produced tentative signs that such a cycle might be unfolding, even as economists debate its sustainability. The December jobs report only added to the ambiguity that now grips economic forecasting.
“Standing still feels good when you’ve been used to falling backwards,” said Stuart G. Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. “But we want to move forward.”
Sources: AP, NY Times, CNBC
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