December Jobs Report Disappoints
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Is it a bad economy or just bad data? That's the question today after a new round of disappointing employment numbers. The government reported the economy added just 74,000 jobs in December, well below expectations. The other surprise, the unemployment rate still dropped.
NPR's John Ydstie spent the day talking with economists about the report, and many say they just don't believe it.
JOHN YDSTIE, BYLINE: Mark Zandi is chief economist at Moody's Analytics. He says, today's report is a statistical aberration.
MARK ZANDI: It doesn't represent reality. It's not consistent with any of the other economic data that we've got which shows a better economy.
YDSTIE: Nariman Behravesh, chief economist at IHS, a global research firm, agrees.
NARIMAN BEHRAVESH: We've had good numbers on things like unemployment claims, surveys of businesses saying that they're going to high more. So, other indicators suggest that this number is a fluke and probably too weak.
YDSTIE: Earlier this week, the payroll processing firm ADP released its survey of job creation in December. It found 238,000 jobs were added last month. Mark Zandi's firm crunches the numbers for that report, which includes an even larger sample of businesses than the government's monthly survey. Zandi believes the ADP number is much closer to the actual job creation taking place in the economy.
ZANDI: The reality is, the economy is creating at least 200,000 jobs per month. That's what it's been doing for much of the past year. I think that's what it's doing right now. I think that's what it did in December. And I think that will be born out in subsequent data.
YDSTIE: But how could the government data be so far off the mark? Zandi says, even large surveys can have statistical hiccups a couple times a year.
ZANDI: You just have noise. I mean, these weird things happen. Some companies report late that normally don't report late. It's just the, you know, the sausage-making of data. And every once in a while, you get a bad piece of sausage, and I think that's what happened here.
YDSTIE: Zandi says cold weather in December also likely hurt job creation, especially in construction and manufacturing. The other curveball in today's data was a sharp drop in the unemployment rate, from 7 percent down to 6.7 percent. But the data behind that number isn't good news. That's because the decline was largely due to nearly 350,000 people leaving the labor market. Many, no doubt, because jobs are still too hard to find.
Kourtney Leibman, who lives in Overland Park, Kansas, knows all about that. She's been looking for a job that makes use of her college degree in English, like teaching. But she's been able to find only a couple of low-paying, part-time jobs.
KOURTNEY LEIBMAN: I'm a receptionist at a church, and then I work at a yarn shop on the weekends.
YDSTIE: Leibman says she has become discouraged about finding a job in her chosen field.
LEIBMAN: I'm not really pursuing that at this time. I'm kind of more trying to get into a different field, maybe like Web design.
YDSTIE: So it's still a difficult job market, would you say?
LEIBMAN: Yes, I would.
YDSTIE: But despite today's disappointing jobs report, Mark Zandi thinks things will get better in 2014. So does Nariman Behravesh, for a number of reasons.
BEHRAVESH: Consumer optimism is good. We're seeing the export situation improving. We're importing less oil. Housing's still doing well. So the variety of factors that lead us to be relatively optimistic about the outlook.
YDSTIE: Financial markets reacted calmly to today's disappointing jobs report. Stocks were mixed. And in the bond market, interest rates were lower. There was some speculation that the weak report might delay the Fed's plans to wind down its stimulus. Fed policymakers will likely consider that when they meet again at the end of this month. John Ydstie, NPR News, Washington.
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