As jobless rate remains high at 10%, here's the good -- and bad -- news
With Friday's jobs report showing that U.S. employers cut 11,000 jobs -- 114,000 fewer than expected, the data are the latest to suggest that the economy is getting worse more slowly than in March. But, as President Obama noted Thursday, to really rebound, the economy needs a virtuous cycle where "the recovery starts to feed on itself."
Much of the improvement in the economy may be a testimony to the economic policies of people like Jason Furman, deputy director of the President's Council of Economic Advisors, who I worked with in the 2004 presidential campaign and who remains focused on job creation. However, along with the recovery, there are significant costs.
Some critics of recovery initiatives like Kevin Hassett, director of Economic Policy Studies at the American Enterprise Institute, continue to grumble, suggesting that tax cuts, not public spending will support real jobs growth. I've certainly commented on the high cost -- $230,769 for the government to create one job. But those who moan about deficits now weren't complaining earlier this decade when
Regardless of your view, here's the good news on jobs. The number of temporary workers increased 52,000 in November, and the average work week grew to 33.2 hours in November from 33 hours in October, the biggest boost since March 2003. Average weekly earnings rose to $622.17. And banks, insurance companies, restaurants and retailers added 58,000 workers in November after adding only 2,000 the month before, according to Bloomberg.
But the bad news won't dissipate anytime soon -- even though things are getting worse more slowly. The government reports that payrolls at builders declined 27,000 after falling 56,000 in October. Retail payrolls decreased by 14,500 after a 44,200 drop. And factory payrolls fell 41,000 after a 51,000 decline in October.
"Absolutely Planning" to Hire at Google
Let's take a look at a couple of companies that are actually hiring. India's Infosys Technologies (INFY) wants to add 1,000 employees in the in the next four to five quarters. And Google (GOOG) -- with about 19,665 workers at the end of the third quarter, down from more than 20,000 last year -- plans to add more. CEO Eric Schmidt told Bloomberg: "We are absolutely planning to increase our headcount, and we're aggressively trying to find the best talent as we did historically."
With 7.2 million thrown out of work since December 2007, these tech companies clearly won't take up all the slack, and it could be years before the economy generates the 300,000 jobs a month needed to be really strong.
But if current trends continue, companies may start feeling pressure to hire -- which will mean more Americans with more money in their pockets that they'll want to spend. This will boost demand and create the virtuous cycle Obama outlined.
Meanwhile, good jobs news could be bad news for stocks, gold and oil as traders change their positions in expectation of higher interest rates and a stronger dollar. After all, if the economy starts creating jobs, the Fed will need to raise rates. That will strengthen the dollar and slam weak-dollar hedges like gold and oil.
Friday's market provided hints of this, as the dollar rose 1.8%, gold shed $65.40 an ounce to $1,152 and oil fell 70 cents to $75.76 a barrel.
Peter Cohan is a management consultant, Babson professor and author of nine books, includingCapital Rising (due in June 2010). Follow him on Twitter. He has no financial interest in the securities mentioned.