Growth in Jobs Slows Sharply to 3-Year Low

[The Nature Boy 4,224]

http://www.nytmes.com/2014/01/11/business/economy/us-economy-added-only-74000-jobs-in-december.html?_r=0

ust when it seemed as if the economy was finally accelerating, the latest employment figures once again confounded expectations of better days ahead.

The government said on Friday that employers added jobs at the slowest pace in three years in December, reversing three months of steadily rising hiring that had persuaded economists and policy-makers at the Federal Reserve that the labor market had finally turned the corner.

Wintry weather, however, may have exaggerated the weakness, and the unexpectedly grim data immediately set off a debate among economists as to whether they were an anomaly or an indication of a more significant slowdown in the economy.

But even after accounting for factors like cold temperatures and snow that may have inhibited hiring, many experts cautioned that other trends, like average hourly earnings and the labor participation rate, were hardly encouraging.

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“What it does say is that we’re not in takeoff mode in the labor market,” said Julia Coronado, chief United States economist at BNP Paribas. “It’s not so much weakness in hiring as lack of vitality. We’re treading water.”

REACTIONS TO JOBS REPORT ON TWITTER
Neil Irwin · @Neil_Irwin
One big culprit in weak job growth: Health care. Lost 1k jobs, had been gaining 20 to 40k a month.
15 hours ago · ReplyRetweetFavorite
On Capitol Hill, the lackluster economic picture in December may strengthen the hand of Democrats who are pushing to extend unemployment benefits to 1.3 million Americans whose coverage expired at the end of the year.

Since midsummer, the job market had been trending upward, with employers adding 241,000 workers in November, a robust performance that helped persuade the Fed to begin easing its vast stimulus program. But the latest data called into question whether the central bank’s optimism was premature.

Employers added just 74,000 jobs last month, the Labor Department said, a far cry from the 200,000 that economists had been looking for, and well below the monthly average increase of 182,500 over the course of 2012 and 2013.

The one apparent bright spot in Friday’s report — a sharp drop in the unemployment rate to 6.7 percent from 7 percent — was tarnished because it largely resulted from people exiting the work force rather than because they landed jobs. The work force shrank by 347,000 in December, reversing a big gain from November, and returning the proportion of Americans in the labor force to its October level of 62.8 percent, the lowest in 35 years.

While some of that decline is because of demographic factors like an aging population and rising retirements, Ms. Coronado said she was particularly troubled by how many prime-age workers were dropping out.

Among workers aged 45 to 54, the participation rate dropped 0.4 percentage point to 79.2 percent, the lowest since 1988. For workers 55 and older, the participation rate edged down only 0.1 percentage point. “It just keeps dropping and dropping,” she said. “It’s depressing, as it’s not just older workers retiring.”

After initially dropping in the wake of the Labor Department report Friday morning, stocks recovered later in the day as investors shifted their focus away from the labor market to what they hope will be more buoyant results as companies report fourth-quarter earnings in the next few weeks.

Some economists, impressed by other recent data showing steadily rising economic output, private surveys showing healthier payroll gains, a growing manufacturing sector, and increased exports, suggested that December’s figures represented a statistical fluke rather than another of the so-called swoons that have been a recurring feature of the fitful recovery that has followed the Great Recession.

“My advice is to ignore this number,” said Nariman Behravesh, chief economist at IHS. “A lot of other indicators are showing strength. It was largely noise last month, and the Fed will see it the same way, unless there is other evidence that gives them pause.”

[Gary and Alla 3,694]

I saw one report which blamed this on cold weather (which did not happen until the very last few days of December) which, of course, is actually caused by global warming, which of course can only be fixed by the US congress by taxing Americans. Preferably rich Americans.

That would give us more jobs.

Since Obama has done NONE of the global warming initiatives he lied about promised, we can assume then that we are doomed to be unemployed and freeze to death because of global warming.

OR

I predict a warming trend to take hold in 6-8 weeks

Meanwhile, workforce participation is at its lowest rate in something like hundreds of years.

http://news.yahoo.com/is-unemployment-really-6-7-percent-194320400.html

I predict the rump swabs will say it is not Obama's fault because unless the President is a Republican, he can do nothing about jobs anyway. PLUS Obama didn't know anything about it.

Happy New Year! AWESOME New Year in Kharkov! Vienna? Nice, but not as awesome as Kharkov. Weinerschnitzel to die for!

[Trumplestiltskin 5,791]

Presidents only have limited control of the job market. If market conditions are #######, it's not so easy to secure private investment to create jobs.

[Operator 1,927]

http://www.nytmes.com/2014/01/11/business/economy/us-economy-added-only-74000-jobs-in-december.html?_r=0

Your link to me to some crazy places.

Seems like the Fed's numbers are much different from the ADP/Moody's numbers. A report on NPR yesterday said it likely had to do with late reporting to the Fed.

http://www.reuters.com/article/2014/01/08/us-usa-economy-employment-adp-idUSBREA070PD20140108

http://business.time.com/2014/01/08/survey-december-saw-best-job-growth-in-a-year/

[Mr. Big Dog 10,747]

Your link to me to some crazy places.

Seems like the Fed's numbers are much different from the ADP/Moody's numbers. A report on NPR yesterday said it likely had to do with late reporting to the Fed.

http://www.reuters.com/article/2014/01/08/us-usa-economy-employment-adp-idUSBREA070PD20140108

http://business.time.com/2014/01/08/survey-december-saw-best-job-growth-in-a-year/

Correct. Wouldn't be surprised if the Dec job numbers will be revised upward later - Nov numbers were just revised upwards from 203K to 241K. And it is worthwhile to remember that even with a weak December, we have the third year in a row with private sector job gains of over 2.1MM annually. Total job gains since the economy bottomed out stand at 7.5MM. Net job creation under this administration so far is right at 3.25MM - that puts this recovery more than a million jobs ahead of where we were at this point in time during the jobless recovery in the first decade of this century. Imagine where this economy could be if Congress would actually have cared about, let alone supported any measures towards job creation over the last few years. They decided instead to do absolutely nothing. Well, not nothing. They did introduce lots of uncertainty with silly and infantile grandstanding exercises which did a lot of damage to the economy. It's almost a miracle that we've made it this far despite the economic terrorism perpetrated by the Tea Party.

[luckytxn 2,264]

The one apparent bright spot in Friday’s report — a sharp drop in the unemployment rate to 6.7 percent from 7 percent — was tarnished because it largely resulted from people exiting the work force rather than because they landed jobs. The work force shrank by 347,000 in December, reversing a big gain from November, and returning the proportion of Americans in the labor force to its October level of 62.8 percent, the lowest in 35 years.

Thanks Obama.

[Gary and Alla 3,694]

So far my predicitons are spot on. Look for warmer weather in 8 weeks or so.

[luckytxn 2,264]

You mean when Spring comes?

So far my predicitons are spot on. Look for warmer weather in 8 weeks or so.

[Mr. Big Dog 10,747]

The one apparent bright spot in Friday’s report — a sharp drop in the unemployment rate to 6.7 percent from 7 percent — was tarnished because it largely resulted from people exiting the work force rather than because they landed jobs. The work force shrank by 347,000 in December, reversing a big gain from November, and returning the proportion of Americans in the labor force to its October level of 62.8 percent, the lowest in 35 years.

Thanks Obama.

The labor force participation rate has been on the decline for more than a decade now and it will continue on that trajectory for more than a decade more. This is because - as I have demonstrated in a thread not too long ago (post below) - the group of the labor force with the lowest labor force participation rate (the 55 and older crowd) is becoming an ever larger part of the overall labor force. The group that has the highest labor force participation rate (25-54) is - as s share of the overall labor force - getting smaller. Math dictates that this will result in the overall labor force participation rate to decline. And that is exactly what we are seeing as the baby boomers move towards and into retirement.

Yes, the Great Recession and the still not optimal labor market put some downward pressure on the labor force participation rate as well but given the demographics, the labor force participation rate would be lower today than it was a decade or two ago whether Obama was President or not. You're giving Obama way too much credit unless you are now also going to hold him responsible for the baby boomers getting older.

It's all spelled out here.

Let's have a look, shall we?

Between 2002 and 2012 as part of the civil non-institutional population, 16-24 year olds have held steady at 16%. The 25-54 bracket has decreased from 56% to 51% of the population and the 55 and older crowd has increased its share from 28% to 33%. That shift between the latter two is precisely what explains the majority of the decreased labor force participation rate. How do we know that?

Well, let's look at the labor force participation rates of these brackets and see what the impact of the aforementioned shift would be. The labor force participation rate of the 55+ crowd has actually increased from 34.5% in 2002 to 40.5% in 2012. That's a steep climb. But not steep enough enough to offset the overall lower participation rate of that bracket as that bracket makes up a larger part of the labor force. Even after that steep climb, the labor force participation rate of that group is still not even half of that of the 25-54 bracket. While not significant for the purposes of this demonstration, I'll mention for the sake of completeness that the 16 - 24 group has seen the labor force participation rate decline from 63.3% to 54.9% over that decade. Which makes sense seeing that more kids spend time in college to get ready for a career. The 25 - 54 age bracket had a decline in the labor force participation from 83.3% to 81.4%.

Now, to test my theory, that the shift in demographics is mostly responsible for the labor force participation rate decline we should apply the 2012 labor force participation rates to a demographic resembling that of 2002 - one where 16% of the population is in the 16-24 bracket, 56% in the 25-54 bracket and the remaining 28% in the 55 and older bracket as was the case in 2002. Applying that 2002 demographic to the actual 2012 labor force participation rates for the respective age groups would tell us what the overall labor force participation would be if the demographic composition hadn't changed.

Doing this, we come up with the following:

Of the 243.3MM total 2012 civil non-institutional population, 39.5MM fall into the 16-24 group, 136.4MM are in the 25-54 group and 67.4MM are 55 and older. Applying the 2012 labor force participation rates, we have 39.5MM * 0.549 = 21.7MM; 136.4MM * 0.814 = 111MM and 67.4MM * 0.405 = 27.3MM. That comes to a total labor force of 160MM.

160MM out of 243.3MM comes to a labor force participation rate of 65.8%.

So, all else being equal but without the demographic changes that took place over the last decade, the labor force participation rate would be less than a percentage point lower now than it was a decade ago. Which is precisely what I said.

Now what?

And yes, this holds true for the last 5 years as it does for the last 10. That's been demonstrated as well.

65.8% is actually the average labor force participation rate over the last 3 decades. And that is what it would be today were it not for the changing demographics.

[luckytxn 2,264]

I agree that Obama has been a disaster. The best part is the morons will be electing Hillary to save us.

smh

The labor force participation rate has been on the decline for more than a decade now and it will continue on that trajectory for more than a decade more. This is because - as I have demonstrated in a thread not too long ago (post below) - the group of the labor force with the lowest labor force participation rate (the 55 and older crowd) is becoming an ever larger part of the overall labor force. The group that has the highest labor force participation rate (25-54) is - as s share of the overall labor force - getting smaller. Math dictates that this will result in the overall labor force participation rate to decline. And that is exactly what we are seeing as the baby boomers move towards and into retirement.

Yes, the Great Recession and the still not optimal labor market put some downward pressure on the labor force participation rate as well but given the demographics, the labor force participation rate would be lower today than it was a decade or two ago whether Obama was President or not. You're giving Obama way too much credit unless you are now also going to hold him responsible for the baby boomers getting older.

It's all spelled out here.

And yes, this holds true for the last 5 years as it does for the last 10. That's been demonstrated as well.

65.8% is actually the average labor force participation rate over the last 3 decades. And that is what it would be today were it not for the changing demographics.

[The Nature Boy 4,224]

The labor force participation rate has been on the decline for more than a decade now and it will continue on that trajectory for more than a decade more. This is because - as I have demonstrated in a thread not too long ago (post below) - the group of the labor force with the lowest labor force participation rate (the 55 and older crowd) is becoming an ever larger part of the overall labor force. The group that has the highest labor force participation rate (25-54) is - as s share of the overall labor force - getting smaller. Math dictates that this will result in the overall labor force participation rate to decline. And that is exactly what we are seeing as the baby boomers move towards and into retirement.

Yes, the Great Recession and the still not optimal labor market put some downward pressure on the labor force participation rate as well but given the demographics, the labor force participation rate would be lower today than it was a decade or two ago whether Obama was President or not. You're giving Obama way too much credit unless you are now also going to hold him responsible for the baby boomers getting older.

It's all spelled out here.

And yes, this holds true for the last 5 years as it does for the last 10. That's been demonstrated as well.

65.8% is actually the average labor force participation rate over the last 3 decades. And that is what it would be today were it not for the changing demographics.

Let me translate all this massive wall of text for you-

It ain't Obamas fault and Bush did it to.

[luckytxn 2,264]

Obama is the POTUS now. He owns everything now. After Hillary wins the next election she will get her first 2-3 years where it will still be Obama's fault, after that it will be all hers.

Let me translate all this massive wall of text for you-

It ain't Obamas fault and Bush did it to.

[Sousuke 1,214]

I agree that not enough focus is being placed on the retirement of the Boomers. I haven't seen any retirement stats being picked up by the media.

According to Metlife in 2013 over 60% of people borne in 1946 are retired. I also know that starting in the 1990s people predicted the labor rate would begin declining in 2011. (When the first bay boomers started hitting 65.)

Edited January 11, 2014 by Brown Dwarf

[Mr. Big Dog 10,747]

Let me translate all this massive wall of text for you-

It ain't Obamas fault and Bush did it to.

The usual - massive fail on your part.

I agree that Obama has been a disaster. The best part is the morons will be electing Hillary to save us.

smh

Didn't read or didn't get it?

[DavenRoxy 1,073]

You mean when Spring comes?

No. When global warming is over. (for the time being)