Just a brief update here:
Today the Bureau of Labor Statistics’ released its eagerly anticipated December Employment Report. We learned that nonfarm payrolls increased by 103,000 in December, and that the November figure was upwardly revised from 38,000 to 70,000. The consensus expectation for the report was an addition of 160,000 jobs, so this report is somewhat below expectations.
The unemployment rate fell to 9.4 percent. Many media outlets are reporting this as though it is good news. It really isn’t, becasue the labor participation rate fell to 64.3 percent. This is extraordinarily low compared to the normal participation rate of 66-67 percent. The last time the labor force participation rate was this low was in 1984. This means that a lot of people stopped looking for work, and are no longer included in the unemployment figures. As these workers return to the work force, we can expect the unemployment rate to tick back upward.
We need job creation in the vicinity of 100,000+ jobs per month just to keep up with population growth. It is nice to see some semblance of job creation, but we need to see far more vigorous growth in the labor market before the employment situation improves. This report, while not bad, is not a cause for celebration.
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