December Employment Drops to New Low

In December, only 18,000 jobs were added to the overall economy, according to the Employment Report, released by the Bureau of Labor Statistics (BLS). Generally, about 150,000 new jobs are needed each month to keep the economy stable, so this was not good news. Furthermore, year-over-year employment was up only 1%. This is the weakest year-over-year job growth since 2004, indicating a steadily declining trend since March 2006, when year-over-year growth peaked at 2.1%.

The unemployment rate rose to 5%. This also continues a worsening trend begun in October 2006, when unemployment was at a low of 4.4%.

Manufacturing jobs continued the decline begun last October. The economy now has 1.5% fewer manufacturing jobs than the year before. Manufacturing jobs are a good leading indicator of overall economic performance, since they produce big-ticket items that consumers will put off buying when the economy starts to weaken. As the orders decline, manufacturers will hire less workers, and even lay off existing workers to keep costs low. (Source: BLS, Employment Situation Summary)

What This Means for You

The worsening employment situation is being aggravated by the Subprime Mortgage Crisis. Manufacturing employment decline is a result of the a long-term trend away from a goods-producing to a service economy. Many experts argue that this is causing the U.S. economy to lose its competitive edge. For a summary of recent employment trends, check out Employment Current Statistics.

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