U.S. Economy Adds 155,000 Jobs in December; Can We Expect a Better Labor Market in 2013?

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Bill O'Leary / The Washington Post / Getty Images

Washington Nationals and the U.S. Chamber of Commerce's National Chamber Foundation hold a job fair for the military on December, 05, 2012 in Washington, DC.

With the Labor Department’s announcement today that the U.S. economy added 155,000 jobs in December and that the unemployment rate held steady at 7.8%, one comes to a depressing realization: the average monthly job creation in 2012 of 153,000 jobs was exactly the same as it was in 2011.

Depending on whom you ask, this number is either right around what is needed to keep up with the growth of the labor force or a touch above it. In other words, for two years of economic recovery, the labor market in the U.S. has been doing only slightly better than treading water, and much of the improvement in the unemployment rate can be attributed to people dropping out of the labor force either because they’ve given up looking for work or because they’ve retired.

This isn’t to say that today’s report is bad news. The numbers show slight upticks in manufacturing employment, the average length of the workweek, and even a 7-cent rise in average hourly pay for workers. In addition, employment gains in November were revised upward in this report by 15,000 jobs. Also, this report is measuring the month of December, which was during the height of the fiscal cliff showdown, an event many economists believed would depress business activity and hiring.

But the news just isn’t good enough and hasn’t been for years now. So will 2013 be another year of painfully slow and steady improvement in the employment situation, or will we finally start seeing life in the labor market that will put a serious dent in our unemployment crisis? Higher taxes and (most likely) less government spending will surely take a bite out the economy and hiring this year, but there are still a few reasons to be optimistic that the economy and job growth will be more robust in 2013 than 2012:

A Healing Europe: The European debt crisis isn’t nearly as volatile now as it was in 2012. After European leaders watched yields on Spanish sovereign debt reach nearly unsustainable levels in June last year, the E.U. finally agreed in principle to creating a much stronger fiscal and monetary union that may allow it to stave off future banking crises. In addition, this fall the E.U. reached an agreement that actually has a realistic shot of lessening Greece’s debt load and putting that country on a path toward recovery by forcing losses on official-sector creditors. In the meantime, American banks have had more time to immunize themselves from potential European defaults, further reducing the risks that a blowup in Europe could cause financial panic in the U.S.

A Frisky Fed: Ben Bernanke has never shied away from aggressive action during his time as chairman of the Federal Reserve. But 2012 was the year he got serious about using the powers of the American central bank to engineer a robust recovery, rather than just stave off an economic collapse. In 2012, Bernanke pulled out all the stops in an attempt to stimulate the economy, announcing a new program of mortgage-backed-security buying and promising to keep interest rates low until the unemployment rate reached 6.5%, or inflation rose above 2.5%. These actions have kept the stock market buoyant and mortgage rates at historic lows, helping goose the housing market into a recovery after five years of falling residential real estate prices.

The Housing Market: A real estate recovery, after all, is nothing to sneeze at. Rising home prices can help bolster consumer demand, as the home is by far the most valuable property most Americans own. The real estate and construction industries also make up a significant part of America’s yearly output — averaging 5% of GDP historically.  That number, however, has fallen closer to 2% in recent years. If real estate investment can once again regain its historical role in the U.S. economy, that will put us well on our way to a healthier economy. The housing-market recovery is tenuous and probably far too reliant on central-bank stimulus, but we’ll take rising home prices over falling home prices any day of the week.

So while the December jobs report wasn’t anything to get too excited about, it’s also not cause for depression. There are still plenty of reasons to believe things will be a bit better in the new year.

16 comments
Richard_Vand
Richard_Vand

Yes, we can definitely expect a better picture in 2013

sedj4wd1
sedj4wd1

These facts are fudged so bad . We are spending more money on Government contractors and the Slow down of winter kills outside jobs. How can they make these facts when claims to welfare and Social Security and Disability are 100 times more then 8 years ago ? Re-education of Jobs to all ages need to be looked at. There are some real problems how Government is handling were the problems are. when you give entitlements out like ice cream be ready to the addiction and how the next generation learns self respect
Like a willow tree it takes much more water to survive and branch"s out and breeds to more consumption then what it put outs at the end the willow tree dies do to starvation

BobJan
BobJan

In January 2014 we will know exactly what the numbers will hold. Or we can summon up Johnny Carson as "carnac" and he'll give us the answer.

mlbeard62
mlbeard62

You speak of rising housing prices as increasing consumer demand.  I assume that is because they either take out equity loans or think that they are wealthier  because of the home value.  The fact is, this type of thinking is how people got so in debt they could not afford their current home.  They simply buy homes they can't afford or spend money they don't have.  How does that help the enoconmy?

FredFlintsone
FredFlintsone

Yest, the labor dept reported 370,000 people lost their jobs last week x 4 weeks = 1.48 million lost jobs for Dec. Add your 155,000 new jobs, grab pocket calculator. What does the Times research dept think going forward? This has been going since feb of 08 and before. I preferred the USA Today deadline myself: Economy ends the year with 155,000 more jobs.

SwiftrightRight
SwiftrightRight

@FredFlintsone Were are you getting your info? Are you confusing folks who lost there job (Mc donald cashier who got cashiered and replaced 10 minutes later) with people who's jobs were eliminated (position was shipped to china)?

FredFlintsone
FredFlintsone

@tom.litton @FredFlintsone This times article uses terms like "2 yrs into this recovery" and headline reads "economy added jobs". What recovery?  No economy did not add jobs, it lost jobs as it has been doing for over 5 years now., regardless of whether those be cashier or scientist jobs.Maybe the Times is better than most of them, good for them if they are. My favorite recovery headline of the day  was USA Today :"Economy ends year with 155,000 more jobs" .  Bloomberg's was a close 2nd; same misleading, manipulated headlines financial media has  been cranking out for years now A bad story remains a bad story no matter how many times you repeat it or who does the repeating. PS the self employed who lose their jobs are never included in the labor dept numbers.

FredFlintsone
FredFlintsone

@SwiftrightRight @FredFlintsone I'm getting my info from the labor dept which has been reporting these types of numbers each and every week  since Feb of 2008 and before.That's a lot of McDonalds cashiers don't you think. And those numbers never include the self employed cashiers. Cashier , manufacturing or landscaping or whatever a lost job is a lost job = shrinking tax base.You think there might be a connection between the record muni bond debt of $3.7 trillion  and what I just wrote; just throwing that out there.

FredFlintsone
FredFlintsone

@tom.litton @SJH0627 @FredFlintsone Don't mention  it.the BLS also reports every Thursday  what they call the "underemployed" which includes the newly unemployed  for that week and the folks  formerly unemployed who are now making less that they were on their old jobs. That number has been sitting at between 14 to 15% the last 5 years. Typically the BLS revises upward (90% of the time) last weeks numbers the following week. I don't believe they are incompetent . The jobs are in China, been there. The housing credit bubble made up the difference in the states. Bubble is gone. Here we are

FredFlintsone
FredFlintsone

@SJH0627 @tom.litton @FredFlintsone Yes they are, I know. Yeah they dot really know how many get jobs . There are only so many applications anyone can fill out before they run out of places to apply ,  then you fall off their  rolls, Typically if they cant find work they get a job paying less than what they were making on their old jobs . The labor dept also releases what they call the "underemployed" which includes the unemployed and the other group that got jobs paying less than they were making before , That number sits at between 14 to 15%. I think they make phone calls to calculate that number

SJH0627
SJH0627

@tom.litton @FredFlintsone those are initial unemployment claims which essentially equates to those who just lost their jobs. Maybe there are people who lost their jobs awhile ago and are just now claming unemployment insurance, but i don't know what the time frame is, if there is any, after one loses their job that they can begin to claim unemployment insurance.

tom.litton
tom.litton

@FredFlintsone @tom.litton Those are unemployment claims, not jobs numbers.  I thought you were talking about jobs numbers?

But if you want to talk unemployment claims:

"The broader trend has been favorable. The four-week average, a less volatile measure, was little changed at 360,000. That's only slightly above the previous week's 359,750, which was the lowest in more than four years."

source:
http://www.wral.com/weekly-us-jobless-aid-applications-rise-to-372k/11937252/

It didn't say why it jumped though.  Does anyone know?

FredFlintsone
FredFlintsone

@tom.litton @FredFlintsone You claim you have no idea where are got those numbers you say after I just told you where I got em.  They report them each and every week as you must know and I just told you and who does the reporting . .Here are some links to help out.Google it yourself. You've heard of Google have you not?

http://seekingalpha.com/article/1093791-weekly-unemployment-claims-unexpectedly-jump-to-372-000         http://www.advisorperspectives.com/dshort/updates/Weekly-Unemployment-Claims.php

tom.litton
tom.litton

@FredFlintsone @tom.litton I still have no idea where you are getting your numbers.  The labor department is reporting 155k more jobs, as they have been for the last 2 years.  I'm afraid i'll have to take their word over a random guy on the internet...