Economy adds just 74K jobs in December

 

The economy added a paltry 74,000 jobs in December, a figure far below the gains of recent months that raised immediate questions about the strength of the economy — and whether the report was an exception to the trend.

The unemployment rate dropped from 7 percent in November to 6.7 percent, though that was in part from people leaving the workforce. The labor force participation rate dropped slightly to 62.8 percent, which is right around the 36-year low.

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The economy had been averaging gains of more than 200,000 jobs per month, and the December totals are the lowest number of jobs the economy has added in a single month since January 2011.

The low figures surprised most observers, and Mark Zandi, chief economist with Moody's Analytics, went so far as to say he wouldn't pay any attention to the latest figures because they are not consistent with any other data. 

“Next month we get benchmark revisions and I expect the December numbers to be revised up,” he said. “The reality is the economy is creating 200,000 jobs a month.

Zandi said the December decline in unemployment is also overstated and will likely be revised up, at least in part, in the next couple of months. 

“Bottom line, I think the economy and job market have shifted into a higher gear and that will become evident in the next few months,” he said. 

The Bureau of Labor Statistics reports are frequently revised both up and down in subsequent months. 

In fact, the report for December revised numbers up for the last month. In November, the report said the economy added 241,000 jobs, more than the 203,000 first estimated. 

The 200,000 jobs that were estimated to have been added in October held steady with the new report.

Still, the figures will disappoint Democrats who are hoping a strong economy will bolster their efforts to hold their Senate majority in the midterm elections.

The new figures come as lawmakers are debating whether to extend federal unemployment benefits. 

The two parties are battling over GOP demands that the $6.4 billion cost of extending the benefits for three months be offset with other spending cuts. 

Some have also questioned whether the program should be renewed at a time when the economy appears to be gaining strength. 

The mixed messages on Friday's report may not give either side more leverage in that fight.

Some Republicans, including Sens. Dan Coats (Ind.) and Rob Portman (Ohio), argue long-term unemployment is a problem plaguing the economy and that changes to the benefits program need to be made to address the nagging issue. 

They have expressed a willingness to pass a short-term extension of federal benefits, as long as they are paid for and include additional skills and training help for those who have been out of work for more than six months.

Construction employment dropped by 16,000 in December after months of gains, possibly reflecting unusually cold weather around the country.  

Manufacturers added 9,000 positions in a bright spot in the report. 

—This story was updated at 9:47 a.m. 

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