Labor Department: Jobless Rate Dropped In December
STEVE INSKEEP, host:
It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.
If you summed up the latest jobs report with a single word of slang, that word might be meh. For those who need the numbers behind the expression, here they are. The government says that the economy added a net 103,000 jobs in the month of December. The unemployment rate, as a result, fell slightly, to 9.4 percent.
We're going to get some analysis now from NPR's economics correspondent John Ydstie. John, good morning.
JOHN YDSTIE: Hi, Steve.
INSKEEP: Okay. What does that meh mean in real terms here?
YDSTIE: Well, what you've got is a disappointing job creation number - only 103,000 jobs coming from a survey of businesses, and an unemployment rate that dropped sharply to 9.4 percent from 9.8 percent. That comes from a separate survey of 60,000 households. Now, most economists look at both of those and view the payroll survey as the best indicator of the health of the job market, month to month.
And that's what I'm hearing from economists this morning, that the big drop in the unemployment rate is probably a statistical anomaly. They're expecting it to go back up again in the coming months. But the 103,000 job creation number is a disappointment.
INSKEEP: Well, let's just make sure that people understand why these numbers sometimes don't match up. The 9.4 percent is the percentage of people out of work who are looking for work. But that size of the workforce can go up, it can go down. The number of jobs available can go up and go down, and so you sometimes have the numbers heading in different directions. Although we can point out here, John Ydstie, that both numbers seem to have gone at least slightly in the direction we want them to go, just not, you're saying, as far as people had hoped.
YDSTIE: Well, both were positive, that's for sure. And one possible reason that the job growth number is so low, is that job growth in October and November was actually revised upward by 70,000. So economists were predicting between 150 and 175,000 jobs created this month, they only got 103,000 in December, but there were 70,000 more jobs created in October and November. So - but, you know, I think it is a disappointing number, and I think it's just another reminder that it - we're not going to see this big breakout in job creation in this recovery.
It's going to be a long hard slog, partly because we have key industries like housing and commercial construction flat on their back. They were big employers and they're not going to be adding many jobs any time soon. Also, state local government budgets are in horrible shape. And they're going to be laying off workers this year. That's also going to be a drag.
INSKEEP: Now, let's remember, in these numbers, private sector employment grew but actually government employment shrank, slightly, by about 10,000 jobs. How does all this affect the long-term unemployed, John?
YDSTIE: Well, the long - number of long-term unemployed actually remained about the same. The number of unemployed dropped by 556,000. That's why we got that big drop in the unemployment rate. But again, economists are looking at that number and thinking that it's going to turn around and go back up in the next couple of months. So we'll see more unemployed in the household survey in the next couple of months and probably a higher rate of unemployment.
INSKEEP: All of this comes after Congress and the White House agreed on some major economic changes just at the end of the year - extending President Bush's tax cuts, adding some other tax cuts, extending unemployment. What do people see is the next possible steps given the latest news?
YDSTIE: Well, I think that this news suggest that the Federal Reserve, for instance, is going to complete its so-called quantitative easing, which will inject a total of $600 billion into the economy by June, because it just looks like the economy isn't breaking out. We also hear Democrats would like to see more stimulus spending and help for folks facing foreclosure, that sort of thing. That's not likely to happen now that Republicans control the House of Representatives.
The Republicans are calling for cuts in the federal budget, figuring that, you know, if the government gets its finances in order, it will provide a better climate for business. But if those cuts come too soon, it could take demand out of the economy and damage growth. And I'm quite sure the White House would not allow that to happen. So I think not likely to see a lot from the White House in Congress, but the Fed will continue its easing, trying to keep the economy going.
INSKEEP: John, thanks very much.
YDSTIE: You're welcome.
INSKEEP: That's NPR's economics correspondent John Ydstie.
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