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U.S. economy adds 146,000 jobs as unemployment rate slips

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The U.S. economy added 146,000 jobs in November and the unemployment rate fell to 7.7 percent, the lowest since December 2008. The government said Superstorm Sandy had only a minimal effect on the figures.

The Labor Department's report Friday offered a mixed picture of the economy.

Hiring remained steady during the storm and in the face of looming tax increases. But the government said employers added 49,000 fewer jobs in October and September than it initially estimated.

And the unemployment rate fell to a four-year low in November from 7.9 percent in October mostly because more people stopped looking for work and weren't counted as unemployed.

The report "is something of a mixed bag but, on balance, it's a positive," said Paul Ashworth, an economist at Capital Economics.

Sandy's effect on the figures was much smaller many analysts had predicted. The government noted that as long as employees worked at least one day during a pay period—two weeks for most people—its survey would have counted them as employed.

Still, there were signs that the storm disrupted economic activity. Construction employment dropped 20,000. And weather prevented 369,000 people from getting to work—the most for any month in nearly two years. These workers were still counted as employed.

Investors appeared pleased with the report. The Dow Jones industrial average gained 56 points in the first hour of trading.

Since July, the economy has added an average of 158,000 jobs a month. That's a modest pickup from 146,000 average in the first six months of the year.

The job growth suggests that most employers aren't yet delaying hiring because of the "fiscal cliff." That's the combination of sharp tax increases and spending cuts set to take effect next year unless the White House and Congress reach a budget deal before then.

There is "no obvious impact from the looming fiscal cliff yet," Ashworth added, "but it could still have a greater effect on December's figures."

In November, retailers added 53,000 positions. Temporary help companies added 18,000 and education and health care also gained 18,000.

Auto manufacturers added nearly 10,000 jobs.

Still, overall manufacturing jobs fell 7,000. That was pushed down by a loss of 12,000 jobs in food manufacturing that likely reflects the layoff of workers at Hostess.

Sandy forced restaurants, retailers and other businesses to close in late October and early November in 24 states, particularly in the Northeast.

Ashworth noted that hiring by companies was actually better in October than the government first thought. The overall job figures were revised lower that month because governments cut about 35,000 more jobs than first estimated.

The U.S. grew at a solid 2.7 percent annual rate in the July-September quarter. But many economists say growth is slowing to a 1.5 percent rate in the October-December quarter, largely because of the storm and threat of the fiscal cliff. That's not enough growth to lower the unemployment rate.

The storm held back consumer spending and income, which drive economic growth. Consumer spending declined in October and work interruptions caused by Sandy reduced wages and salaries that month by about $18 billion at an annual rate, the government said.

Still, many say economic growth could accelerate next year if the fiscal cliff is avoided. The economy is also expected to get a boost from efforts to rebuild in the Northeast after the storm.

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  • The bad news is...
    We need about 150,000 new jobs per month just to keep up with population growth, so until you see actual job growth closer to 200,000 or more per month, any decline in the unemployment rate is simply due to less people participating in the labor force (i.e. seeking work). Here's the math: Current U.S. Population = ~314,000,000; Current Annual Growth Rate = .009 to .010. At the low end of growth, that's 235,500 new Americans per month. With the current labor participation rate of ~.64, that's 150,400 new Americans seeking work each month. Since we've created an average of 151,455 jobs per month this year, we're barely keeping pace with the workforce, thus virtually all decreases in the unemployment rate are due to people leaving the workforce. This doesn't sound like a recovery to me. Let me know when there's some actual good news.

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  2. Historically high long-term unemployment, unprecedented labor market slack and the loss of human capital should not be accepted as "the economy at work [and] what is supposed to happen" and is certainly not raising wages in Indiana. See Chicago Fed Reserve: goo.gl/IJ4JhQ Also, here's our research on Work Sharing and our support testimony at yesterday's hearing: goo.gl/NhC9W4

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