The number of jobs added in December in the U.S. was only 74,000, according to preliminary figures from the U.S. Labor Department, the New York Times said Friday.[1]  --  It was only one third the gain "many economists had been looking for."  --  "The unemployment rate did fall to 6.7 percent from 7 percent in November, the lowest since November 2008," said Nelson Schwartz.  --  "But that was largely because of people dropping out of the work force rather than finding jobs."  --  "The overall labor force has shrunk by about 550,000 in the last 12 months."  --  The chief U.S. economist at BNP Paribas called attention to how many "prime-age" workers were dropping out.  --  "Among workers aged 45 to 54, the participation rate dropped 0.4 percentage point to 79.2 percent, the lowest since 1988.  --  For workers 55 and older, the participation rate edged down by only 0.1 percentage point.  --  'It just keeps dropping and dropping,' she said.  --  COMMENT:  As this chart shows, the number we should really be looking at, the so-called EMRATIO = the percentage of civilians employed in the U.S. economy, dropped from a high of about 64.5% in 2000 to 58.5% as the Great Financial Crash bottomed out in 2009, and has scarcely risen since.  --  The jobs that have been lost number almost 15 million.  --  This chart shows that there has been scarcely any recent change in the U.S. EMRATIO, indicating that it is becoming a "new normal" for the U.S. economy.  --  This presentation of the data, comparing present to past recessions, would make its point even more strikingly if the red line were extended horizontally to the right for yet another 42 months.  --  (The fact that part-time workers are counted as "employed" in current statistics helps mask the extraordinary loss of employment opportunities that the 21st century has brought to the American economy.)  --  As Carol Boyd Leon said in 1981, the EMRATIO is a more significant statistic than the unemployment rate because it shows "how well the economy is performing."  --  For the record, the number of Americans employed according to the U.S. Bureau of Labor Statistics was 144,586,000, and the the number in the "civilian noninstitutional population" is 246,745,000.  --  If the U.S. prison population (2,228,400 [2012]) were added to the civilian population, the EMRATIO would be 58.1%....

1.

Economy

JUST AS HOPES WERE LIFTING A MEAGER GROWTH IN PAYROLLS
By Nelson D. Schwartz

New York Times
January 10, 2014

http://www.nytimes.com/2014/01/11/business/economy/us-economy-added-only-74000-jobs-in-december.html

In a blow to hopes that the economy was finally gaining momentum, the government reported on Friday that employers added jobs last month at the slowest pace in three years, although some experts cautioned that wintry weather in many parts of the country may have skewed the data.

In December, employers added just 74,000 jobs, the Labor Department said, well below the 200,000 gain many economists had been looking for.  The latest figures were a reversal from healthier monthly payroll gains in the fall that had convinced many economists -- as well as policy makers at the Federal Reserve -- that the labor market was on a more solid footing.

The unemployment rate did fall to 6.7 percent from 7 percent in November, the lowest since November 2008.  But that was largely because of people dropping out of the work force rather than finding jobs.

Economists said that weather exaggerated the weakness in the report.  But they also cautioned that other indicators, like average hourly earnings and the labor participation rate, were hardly encouraging.

“Weather is clearly playing a role and you don’t want to overreact to any one number,” said Julia Coronado, chief United States economist at BNP Paribas.

She estimated that cold temperatures and snow subtracted about 75,000 jobs from the overall total for job creation in December.

“What it does say is that we’re not in takeoff mode in the labor market,” Ms. Coronado added.  “It’s not so much weakness in hiring as lack of vitality. We’re treading water.”

While some experts have attributed the falling proportion of people in the labor force to demographic factors like an aging population and rising retirements, Ms. Coronado said she was troubled by how many prime-age workers were dropping out.

Among workers aged 45 to 54, the participation rate dropped 0.4 percentage point to 79.2 percent, the lowest since 1988. For workers 55 and older, the participation rate edged down by only 0.1 percentage point.

“It just keeps dropping and dropping,” she said. “It’s depressing, as it’s not just older workers retiring.”

The latest data also called into question whether the central bank’s optimism was premature. Just last month, the Federal Reserve announced it would begin pulling back from its enormous stimulus program after several months of healthier job gains.

Although some sectors, like retailing, posted decent gains, other sectors that had been healthy during 2013 reversed course in December, significantly lowering the overall performance of the job market.

For example, the construction industry lost 16,000 jobs in December, a sharp reversal from the 2013 average monthly gain of 10,000 jobs. Similarly, health care employment fell by 6,000, compared with monthly gains of 17,000 in 2013 and 27,000 in 2012.

The average workweek in the private sector fell to 34.4 hours, a drop of a tenth of an hour and another sign of weakness in the broader economy.

“It’s an ugly report,” said Guy Berger, United States economist at RBS Securities. “We’re still digging through it, but it’s hard to explain the magnitude of the miss.”

Still, month-to-month volatility in the payrolls report is common, and the numbers could be revised upward in the future. For example, the Labor Department revised the number of jobs created in November to 241,000 from 203,000.

“You do get misses like this every once in a while,” Mr. Berger noted.  Still, he said, the continuing drop in the labor participation rate was striking.  The overall labor force has shrunk by about 550,000 in the last 12 months.

Other economists, like Ian Shepherdson of Pantheon Macroeconomics, suggested that the December data represented a statistical outlier, not a signal of another so-called swoon as has occurred repeatedly since the fitful recovery began in mid-2009.

“Ignore the wild payroll number,” he said in a note to clients.  He said he did not expect the December figures to alter the Fed’s tapering course when policy makers next meet at the end of January.