Disappointing U.S. Job Growth; Jobless Rate Up to 9.8%
Today's report is a far, and disappointing, cry from the 150,000 jobs forecast by analysts. And a steep decline from the 172,000 jobs created in October.More than 15 million people were out of work last month. Those without jobs for six months or longer reached 6.3 million in November. What happened to the economic recovery?
"It's quite disappointing, and given other data we've seen, hard to believe," says James O'Sullivan, chief economist at MF Global. "But don't take a single report too literally. Growth is gaining momentum, despite the November payroll report," which he calls an "outlier." The millions of long-term unemployed who can't find jobs may beg to disagree.
One reason for the decline, O'Sullivan says, is that payroll gains may have "run ahead of itself" in July, August, September and October, and now it's averaging out.
The job picture in most industries barely budged last month. Private companies added an anemic 50,000 employees to their rolls in November, the smallest gain since January. That's down from the 160,000 private-sector jobs added in October. The bright spots came from temporary help (thank goodness for the holidays), which added 40,000 jobs, and health care fields, which added 19,000.
Retailers slashed 28,100 positions. Factories sliced 13,000 jobs, after posting gains earlier this year. Government shed 11,000 employees.
The number of "underemployed" -- part-time workers who want full-time work -- stayed at October's level of 17%.
Hopes were higher for November's job report following a glimmer of good news on the economic front the last few days. October's pending home sales are higher than expected and initial unemployment claims started to trend lower. November retail sales jumped higher than they had in years.
Employment experts attribute the tepid job growth in part to uncertainty surrounding the midterm elections last month. "Leading up to that point, the business community was not committed to hiring going into the fourth quarter," says Jodi Chavez, senior vice president of Ajilon Professional Staffing, a division of Adecco Group, the world's largest recruiter and provider of temporary workers. "Companies see the economy as volatile, and until that levels off, they view a commitment to full-time employees as risky."
That volatility could get worse. Painting a gloomy economic forecast next year, the Labor Department posted a loss of 14,000 local jobs last month, which could mushroom as local governments continue to deal with ballooning budget deficits. California's deficit has grown to $25.4 billion and is more than one-fifth of the general fund.
Congress' failure to extend state unemployment insurance for those out of work 27 weeks or more could actually worsen the country's overall economy and result in the loss of another 600,000 jobs by the end of next year, according to a White House Council of Economic Advisers report. The jobless benefits program was allowed to expire on Tuesday. About 2 million unemployed workers will lose that safety net this month.
The CEA estimates that the additional benefits helped create or sustain jobs over the last two years or so. If millions of people lose their benefits right before the holidays, and many millions more lose theirs in the months after that, the impact on consumer spending will be significant, says CEA Chairman Austan Goolsbee.
The uncertain outcome of the Congressional fight over tax cuts also could put a crimp in consumer spending, which showed a pulse in recent weeks. Then what happens? Employers stop hiring.
Economists generally agree that initial jobless claims should be about 320,000 per week for a healthy economy. About 436,000 new claims were filed for unemployment benefits last week, up about 26,000 from the week before.
According to the Brookings Institution, if 208,000 jobs were created each month, it would take 11.5 years to see the pre-recession employment levels. Last month's tepid job growth will do little to help reverse the more than 8 million jobs lost during the financial crisis.
That's bad news for Don Thompson, 35, a Los Angeles construction worker who was laid off from his full-time job in mid-2008. "I've tried everything, shy of going up to contractors at Lowe's and asking for work," he says. "I comb Craigslist and call builders every day. It feels hopeless right now."