Jobs Report: Unemployment Rate Holds Steady At 7.8%

December jobs report

By Jason Lange


WASHINGTON -- The pace of hiring by U.S. employers eased slightly in December, pointing to a lackluster pace of economic growth that was unable to make further inroads in the country's still high unemployment rate.

Payrolls outside the farming sector grew 155,000 last month, the Labor Department said on Friday. That was in line with analysts' expectations and slightly below the level for November.

Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.

That should reinforce expectations that the economy will grow about 2 percent this year, unlikely to quickly bring down the unemployment rate or make the U.S. Federal Reserve rethink its easy-money policies, which have been propping up the recovery.

"It's not a booming economy, but it is growing," Jim O'Sullivan, an economist at High Frequency Economics in Valhalla, N.Y., said before the data was released.

The jobless rate held steady at 7.8 percent in December, down nearly a percentage point from a year earlier but still well above the average rate over the last 60 years of about 6 percent.

The Labor Department raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent, citing a slight change in the labor market's seasonal swings.

Most economists expect that the U.S. economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.

Friday's data nonetheless gave signals of growing momentum in the labor market's recovery from the 2007-09 recession. Many economists had expected December's payroll gains to be padded by one-time factors like the recovery from a mammoth storm that hit the East Coast in late October.

The government had said last month the storm had no substantial impact on the November data, and many economists expected the government to recant by revising downward in Friday's report its estimate for payroll gains in November. Instead, the government revised its estimate for November payrolls upward by 15,000.

"There is some evidence that underlying jobs growth has improved," Paul Dales, an economist at Capital Economics in London, said before the report was released.

More: Fiscal Cliff Deal Cuts Average Workers' Paycheck By $1,000


Austerity's Bite

Despite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March loom over the economy.

Many economic forecasts assume the cuts -- which would hit the military, education and other areas -- will ultimately be pushed into next year as part of a deal sought by lawmakers to reduce gradually the government's debt burden.

Initially, the cuts were planned to have begun this month as part of a $600 billion austerity package that also included tax hikes. Hiring in December may have been slowed by uncertainty over the timing of the austerity, economists say.

Congress this week passed legislation to avoid most of the tax hikes and postpone the spending cuts.

Even with the last-minute deal to avoid much of the "fiscal cliff," most workers will see their take-home pay reduced this month as a two-year cut in payroll taxes expires.

That leaves the Fed's efforts to lower borrowing costs as the main program for stimulating the economy.

The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further. On Thursday, however, minutes from the Fed's December policy review pointed to rising concerns over how the asset purchases will affect financial markets.

Analysts ahead of the report expected some of the strength in job creation in December would be due to the Fed's policies.

"Despite the end-of-year angst over the 'fiscal cliff,' financial conditions remained supportive of job growth in December," economists at Nomura said in a note to clients earlier in the week.

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224 Comments

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helenoconnell39

What about how low wages have gotten and how hours are shorter for many people who are fortunate enough to even have a job!

January 11 2013 at 2:44 PM Report abuse rate up rate down Reply
evan_barthold

Whats unemployment ????????

January 06 2013 at 8:46 PM Report abuse rate up rate down Reply
LofAlexandria

The jobs situation is only going to get worse and worse over time. The elephant in the room that everyone seems to be missing is that continued advancements in technology and automation are going to continue to exacerbate the problem. There is simply not enough work necessary to accommodate the number of workers any longer and this is only going to get worse as more and more industries fall prey to automation and further increases in productivity.

I wrote more about this topic recently, my article can be found here: http://lofalexandria.blogspot.com/2011/09/where-are-all-jobs.html

January 05 2013 at 7:08 PM Report abuse rate up rate down Reply
maa2626

the 155k in jobs created does not keep pace with the population growth. If we had not bailed out the auto industry, banking, insurance, mortgage and real estate we would have actual and true job growth. government /federal management of private industry never works. we are locked in to a rather dismal economic future. the problem has been created by democrats and republicans, both are at fault in this calamity.

January 05 2013 at 9:38 AM Report abuse rate up rate down Reply
michelebachmann9

Rick Perry told me this joke.

GOP = GOOFY ODD PEOPLE

January 04 2013 at 7:10 PM Report abuse -2 rate up rate down Reply
3 replies to michelebachmann9's comment
michelebachmann9

Right now the billionaire Koch Brothers are paying us to legislate their agenda.

January 04 2013 at 7:00 PM Report abuse -2 rate up rate down Reply
3 replies to michelebachmann9's comment
Carolyn

This is a republican strained recovery. We would be so much better off if congress would do their job instead of filibusters and reducing government to its smallest entity except for their pet programs. Great tactic if you want government employees doing more than one job. That way government will be too busy to try to investigate the real corruption in government. Republican motto government doesn't work, so their job is to make sure of it.

January 04 2013 at 4:23 PM Report abuse -2 rate up rate down Reply
1 reply to Carolyn's comment
dembaitnswitch

tissue sweety ?

January 04 2013 at 5:49 PM Report abuse rate up rate down Reply
6 replies to dembaitnswitch's comment
cherofnc

Last month unemployment was at 7.7. This month it is 7.8. but it is holding steady according to this crappy article. What we have here is Obamamath. Don't be telling me about some BS revision, that just happened to (suprise) come out today. This article also said: Most economists think the economy will be held back by TAX HIKES. Ya think? Where did that come from? I thought tax hikes would do nothing but put them greedy ol rich job creating people in their places and all. I am disgusted by the American people electing this buffoon and allowing the media to manipulate them into another recession. You get what you voted for. ENJOY eating beanie weenies.

January 04 2013 at 4:14 PM Report abuse rate up rate down Reply
1 reply to cherofnc's comment
clark8642

The revision to 7.8 percent in November also included an upward revision of 15,000 jobs over the initially reported November jobs number. As far as tax hikes we all got a tax increase on January 1 in income and payroll taxes when the temporary cuts expired. Then we all got an income tax cut, including the rich, on January 3 when the President signed the cliff deal. The temporary payroll tax holiday expired for everyone. No spending cuts so, per the Congressional Budget Office, all of this added $4 Trillion to our debt over the next nine years.

January 04 2013 at 5:07 PM Report abuse -1 rate up rate down Reply
lpi2007

Jan 2nd, My understanding that everything is wonderful with unemployment, lowest in 90 years.... even though the 15 million that lost their benefits and the 10 million that stopped looking for work... The Media is so full of it, they don't know what the hell to right anymore.... ONLY IN AMERICA

January 04 2013 at 4:09 PM Report abuse rate up rate down Reply
1 reply to lpi2007's comment
keithfisch

"Jan 2nd, My understanding that everything is wonderful with unemployment, lowest in 90 years.... "

thent not surprising anyone here, you understood wrong.

January 04 2013 at 8:42 PM Report abuse rate up rate down Reply
Richard

Payrolls outside the farming sector grew 155,000 last month.

This is not just a lackluster pace, it is a dismal failure of this administration to grow our economy.
It is a testimony to the complete failure of this president and his leftist minions to have even a basic understanding of what it takes to grow business and create jobs. Going on five years now of him using excuses and blaming someone else for his failures is growing pretty thin with real thinking Americans.
He should either step down for the good of the country, or start taking the advice of smarter, more
qualified people who do know what is needed.

Obama had two full years of democratic control in both houses, in spite of this nothing he got passed during that time has done anything useful to help the unemployed job seekers. Joe Biden promised us 500,000 new jobs a month by 2010 if we would pass the stimulus bill. Where are they Joe? December is traditionally a month when many part time workers are hired, in spite of this only 155,000 jobs were added. Not even enough to keep up with population growth. Complete failure.

January 04 2013 at 3:59 PM Report abuse +4 rate up rate down Reply

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