The terrible December jobs report
The jobs report is out today, and it’s weak. The economy added 74,000 jobs in December — the lowest growth the economy has seen since January 2011 and far below the expectation of 196,000. Because of people dropping out of the labor force, the unemployment rate dropped to 6.7% from 7.0% in November. Here’s Reuters’ chart of U.S. non-farm payrolls over the last year:
One theory of why the job growth number was so weak in December, put forth by a number of people including Felix Salmon, is because of unusually bad weather. This chart from Justin Lahart shows the number of people, in thousands, who had a job but who weren’t paid during the survey week because of weather:
Former Labor Department deputy chief economist Jared Bernstein doesn’t think it had a big effect. In his analysis of this month’s BLS report he wrote, tThe BLS commissioner mentioned unusually cold weather as one factor possibly driving down construction, which lost 13,000 jobs after averaging +10,000 per month last year. But nothing else jumped out at me.”
The bigger problem is the number of people dropping out of the labor force. The Economic Policy Institute has a good series of interactive charts on those “missing workers” who should be either working or looking for a job, but aren’t. Here’s one on the age and gender of those workers:
Then, of course, there is Bill McBride’s updated chart of the current economic recovery compared to recoveries from previous recessions since World War II:
Finally, here’s the payrolls gap. At the current level of growth, it will take another 16 months to get back to the number of jobs the economy had before the 2008 recession.