Jan. 4, 2013 at 8:41 AM ET
Employers last month shrugged off worries about the high-profile budget battle in Washington and continued hiring at a slow, steady pace, government data showed Friday.
“(The job market) has been very resilient to a lot of the uncertainty that people have been talking about,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former economic adviser to Vice President Joseph Biden. “This is an okay job report at a time when you might have expected something worse.”
But the pool of workers looking for a job remains nearly twice as big as it was before the 2007 recession began to take hold.
The Labor Department reported Friday that payrolls, rose by 155,000 in December. That’s just about fast enough to keep pace with the growth of the population, but not enough to make a dent in the unemployment rate, which remained stuck at 7.8 percent last month.
“This has been the story throughout the recovery that began more than three years ago,” said Paul Ashworth, chief U.S. economist at Capitol Economics.
The number of unemployed Americans last month was essentially unchanged, at 12.2 million. That’s down from a peak of 15.4 million in October, 2009, but much higher than the 6.7 million who were out of work in March 2007.
The job gains last month were spread over a broad segment of the economy, from construction to manufacturing to health care.
Economists say the breadth of jobs gains is a good indication that the slow but steady recovery remains on track. But most forecasters expect the lackluster pace of growth – about two percent as measured by the gross domestic product – to continue through 2013.
Wage growth also remained flat, after adjusting for inflation, as it has since the recovery began. That trend runs counter to past economic rebounds, when wages have traditionally risen as the unemployment rate has fallen, according to Wells Fargo chief economist John Silvia.
“(That) supports the message of weaker consumer spending and GDP growth ahead,” he said
While the political spectacle of a dysfunctional government seems have had little impact on December hiring, the results of the budget battle are expected to have at least some dampening effect on hiring. Government spending, a critical target in the ongoing debate, makes up roughly 20 percent of U.S. economic activity.
Friday’s numbers demonstrated the impact of the ongoing budget squeeze on the job market. In December, government at all levels cut 13,000 jobs. For all of 2012, government payrolls shrank by 68,000.
While the December jobless rate was nearly a percentage point lower than a year ago, it’s still well above the average over the last 60 years of about 6 percent. The drop has also come as millions of workers have given up trying to find work. As a result, the portion of the population officially counted in the labor force is at the lowest level in three decades.
The pool of “long-term” jobless workers – those without a paycheck for 27 weeks or more – remained unchanged in December at 4.8 million, or nearly 40 percent of the unemployed.
That high level of persistent unemployment prompted the Federal Reserve to embark on its latest, open-ended round of bond buying in September to force interest rates lower and help spur hiring. The central bank has kept interest rates near zero since 2008. On Thursday, however, minutes from the Fed's December meeting suggested that some policymakers were growing more concerned about the impact of that policy on the financial markets.
Friday’s lackluster job data will likely help support proponents of the Fed’s continued easy-money policy, said Ashworth.
“If this state of affairs continues throughout most of this year, as we expect, then it is hard to see the Fed dialing back or stopping its (bond) purchases as some officials currently envisage,” he said.
The December report included a number of revisions, in part due to annual tweaks in the adjustments the Labor Department uses to smooth out seasonal swings in hiring. The government raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent. The payroll number for November was also raised to 161,000 new jobs, from 146,000.