The economy added 155,000 jobs, not much more than the 150,000 jobs required for healthy growth. The unemployment rate remained at 7.8%, and the number of unemployed stayed at 12 million, according to the Bureau of Labor Statistics. Why aren't more jobs being added?
The answer can be summed up in two words -- fiscal cliff. Businesses were basically treading water, waiting to find out what tax rates they would pay come January. Now that it's been resolved, expect employment to tick up a bit in January. Then again, the coming debt ceiling debate could provide additional uncertainty if it appears Congess is willing to let the U.S. default on its debt. Sounds crazy, but many legislators think this is their only negotiating tool to get the government to cut back on spending. Unfortunately, they've lost confidence in the normal budget process.
The major job gains were in the following sectors:
- Health care -- 55,000 (more than double November's increase of 25,900).
- Leisure and hospitality -- 31,000.
- Construction -- 30,000 (after being down 10,000 in November).
- Manufacturing -- 25,000
- Financial activities -- 9,000.
- Automotive - 4,800.
The losers were not surprising.
- Retail trade -- 11,300 (letting go of workers after the holiday shopping season).
- Government -- 13,000 (result of budget shortfalls).
- Information -- 9,000 (ok, that one was surprising).
- Temporary help -- 600 (letting go of workers after holiday shopping season).
Although not a great report, it shows that the U.S. economy is still recording gains in spite of the confusion coming out of Washington. Increases in construction jobs point to a much stronger housing market in 2013. The (Source: BLS, Employment Situation Summary ).
What This Means for You
Expect President Obama to address additional job creation strategies in the 2013 State of the Union address. Fortunately for the unemployed, extended unemployment benefits were retained for another year in the fiscal cliff 2013 deal. If you are one of those who left the labor force, share your frustration in What Causes Unemployment?
New! Watch the Video - Understanding the Unemployment Rate