‘Bizarre,’ ‘Perplexing’ December Jobs Report Stumps Economists

No one expected such a small uptick in jobs. So, what happened?

Bureau of Labor Statistics of the Labor Department officials testify during a hearing before the Joint Economic Committee January 10, 2014 on Capitol Hill in Washington, DC.
National Journal
Catherine Hollander
Add to Briefcase
See more stories about...
Catherine Hollander
Jan. 10, 2014, 7:45 a.m.

Eco­nom­ists de­ployed their ar­sen­al of syn­onyms for “weird” Fri­day in try­ing to de­scribe the Decem­ber jobs re­port, but the mes­sage was clear: What the heck happened?

Many ex­pec­ted payrolls to swell by around 200,000 jobs. So you could just feel the jaws drop­ping up and down Wall Street at 8:30 a.m. when the Bur­eau of Labor Stat­ist­ics re­por­ted a mea­ger gain of 74,000. Even the un­em­ploy­ment rate, which de­clined to a lower-than-ex­pec­ted 6.7 per­cent from 7 per­cent in Novem­ber, fell largely for the wrong reas­on — people leav­ing the work­force. “This is just one of the most un­usu­al re­ports, really, I’ve seen in quite a long time here,” said Douglas Hand­ler, chief U.S. eco­nom­ist at IHS Glob­al In­sight.

What happened? Why were the fore­casts so off the mark? Or will BLS change its num­bers when it re­vises them next month? We won’t really have a bet­ter sense un­til Feb. 7, when the agency re­leases its next em­ploy­ment re­port.

In the mean­time, eco­nom­ists have a few ideas:

  • Blame the weath­er. Some ex­cep­tion­ally bad weath­er last month might have dragged down con­struc­tion em­ploy­ment, which fell by 16,000 in Decem­ber, and brought over­all payroll num­bers down by between 50,000 and 75,000, Mor­gan Stan­ley eco­nom­ists es­tim­ate. BLS also cited “un­usu­ally cold weath­er” as a po­ten­tial cul­prit for a de­cline in con­tract­or em­ploy­ment. But the weath­er doesn’t ap­pear to ac­count for all of the weak­ness.
  • Things are not really get­ting bet­ter, faster for the labor mar­ket, and this is just evid­ence we were too op­tim­ist­ic in mak­ing our pre­dic­tions. The av­er­age job growth per month in 2013 (182,000) doesn’t look all that dif­fer­ent from 2012 (183,000) or 2011 (175,000). And labor force par­ti­cip­a­tion — a meas­ure of people who either have or are look­ing for jobs — con­tin­ued to de­cline last month, fall­ing by 0.2 per­cent­age points and off­set­ting an in­crease in Novem­ber. The weak­ness in the Decem­ber jobs re­port was pretty much across the board: There was not a lot of good news to be found, oth­er than the pos­sib­il­ity this was just a strange blip.
  • Things are really get­ting bet­ter for the labor mar­ket, and this is just noise. This the­ory says the num­bers are so out of line with Novem­ber’s gain of 241,000 jobs, and an over­all sol­id eco­nom­ic end to 2013, that it’s prob­ably just due to some strange sea­son­al-ad­just­ment factors (the way the gov­ern­ment smooths out its num­bers to ac­count for dif­fer­ent be­ha­vi­or in dif­fer­ent sea­sons) and weird weath­er. That com­bin­a­tion means this re­port really doesn’t say all that much: Stick to the three-month av­er­ages or longer for the real story. “There’s a les­son to be learned, I think, from the data that you don’t take the re­cov­ery for gran­ted, but I do think this is go­ing to be seen more as an ab­er­ra­tion than any­thing else,” said IHS’s Hand­ler.
What We're Following See More »
ONE WEEK
Senate Votes To Fund Government
1 hours ago
BREAKING
ON TO SENATE
House Passes Spending Bill
2 hours ago
BREAKING

The House has passed a one-week spending bill that will avert a government shutdown which was set to begin at midnight. Lawmakers now have an extra week to come to a longer agreement which is expected to fund the government through the end of the fiscal year in September. The legislation now goes to the Senate, where it is expected to pass before President Trump signs it.

FULL CABINET IN PLACE
Acosta Confirmed As Labor Secretary
3 hours ago
THE DETAILS

Alexander Acosta was confirmed Thursday night as Labor secretary, officially filling out President Trump's cabinet on day 98 of his presidency. Nine Democrats joined every present Republican in voting to approve Acosta, with the final tally at 60-38. Trump's first choice for Labor secretary, Andrew Puzder, withdrew his nomination after taking criticism for hiring undocumented workers and for other matters in his personal life.

Source:
HAS WHITE HOUSE BACKING
Hurd to Make Push on Federal IT
4 hours ago
THE DETAILS

"Rep. Will Hurd (R-TX) plans to introduce legislation today designed to help federal agencies update their aging technology—and this time, it has White House backing. Hurd worked alongside White House Office of American Innovation officials Reed Cordish and Chris Liddell in crafting and tweaking the legislation, and called their partnership an 'invaluable' part of the process."

Source:
2,300 JOBS ON THE CHOPPING BLOCK
Tillerson Looking to Slash 9% of State Dept. Workforce
4 hours ago
THE LATEST

"The State Department plans to cut 2,300 U.S. diplomats and civil servants—about 9 percent of the Americans in its workforce worldwide—as Secretary of State Rex Tillerson presses ahead with his task of slashing the agency’s budget, according to people familiar with the matter. The majority of the job cuts, about 1,700, will come through attrition, while the remaining 600 will be done via buyouts."

Source:
×
×

Welcome to National Journal!

You are currently accessing National Journal from IP access. Please login to access this feature. If you have any questions, please contact your Dedicated Advisor.

Login