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Fri December 7, 2012
Unemployment Falls To Lowest Rate In Four Years
Originally published on Fri December 7, 2012 10:50 pm
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The nation's unemployment rate fell to 7.7 percent in November, that's the lowest it's been in four years. The Labor Department's latest jobs report released this morning showed employers added more jobs than expected.
But as NPR's Jim Zarroli reports, economists warn these new numbers aren't what they appear to be.
JIM ZARROLI, BYLINE: November was a month when much of the country was still digging out from the wreckage of Hurricane Sandy. There was a contentious election and Washington was at odds over the fiscal cliff. All that had an effect on business and consumer confidence, so economists were expecting a weaker labor market. As it happened, employers added 146,000 jobs to their payrolls, nearly twice as many as expected.
Alan Krueger is chairman of the president's Council of Economic Advisers.
ALAN KRUEGER: We see an economy that's continuing to heal. We're not yet back to full health, but we're making progress.
ZARROLI: But in many ways, the report was weaker than the headline numbers indicated. For one thing, the Labor Department said fewer jobs were added in September and October than first thought and there were reasons to question November's numbers, too, says Bernard Baumohl of the Economic Outlook Group.
BERNARD BAUMOHL: One can't take this report too seriously. I just think it doesn't tell us very much about what's going on in the labor market and certainly not with the economy.
ZARROLI: Take the drop in the overall unemployment rate.
DIANE SWONK: In terms of the unemployment rate coming down, it came down for the wrong reasons.
ZARROLI: Diane Swonk is chief economist at Mesirow Financial.
SWONK: It came down because fewer people were in the labor force because they had - fewer people had hoped to throw their hat in the ring. We call it the labor force participation rate that actually declined.
ZARROLI: In other words, a lot of job hunters grew so discouraged they stopped looking for work and were no longer counted as unemployed. More puzzling was the impact of Hurricane Sandy. The Labor Department said it appeared to have little impact on the unemployment rate. Bruce(sic) Baumohl says that doesn't seem to make a lot of sense.
BAUMOHL: One is really hard pressed to accept all those numbers at a time when so many businesses had to shut down because of power outages and there was such disruptions throughout at least half of the economy.
ZARROLI: The discrepancy appeared to have a lot to do with the way the Labor Department does its calculations. People who miss work for weather-related reasons aren't counted as unemployed, even if they weren't paid for the time they missed. And a lot of other people have been dislocated and are still waiting to find out whether they can return to their jobs. As time goes on, a lot of them will probably join the unemployment rolls and the jobs picture will grow worse.
Diane Swonk says the losses will be offset to some degree by the rebuilding effort. It will create some jobs in areas like construction. Swonk says, in the long run, there are reasons to be optimistic about the job market. The housing industry, for instance, is showing real signs of a rebound.
SWONK: You add all those things up along with a little additional stimulus from the Federal Reserve and you get an economy that is a difference between a 2 percent economy that could be closer to 3 percent next year. That's a huge difference because that will really whittle away at the unemployment rate.
ZARROLI: But Swonk also says this rebound will only happen if Congress and the White House can resolve the current budget stalemate. If they can't, she says, look for the labor market to get a lot weaker next year. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright National Public Radio.