Good news and bad on the jobs front
President Harry Truman reportedly said he was “in search of a one-armed economist, so that the guy could never make a statement and then say, ‘on the other hand.’ “
There are plenty of “on the other hand” comments to be made with respect to the latest unemployment figures released on Friday. And many observes have already offered some of those counterpoints.
But first, consider this indisputably good news:
The unemployment rate for January fell to 8.3 percent, the Bureau of Labor Statistics reported, the lowest level since a month after Barack Obama became president. It marked the fifth straight month the unemployment rate has dropped.
Additionally, employers added 243,000 jobs in January, 40,000 more than were added in December and almost double what many economist had predicted.
Moreover, the private sector led the way in jobs creation, with manufacturing producing 50,000 new jobs and professional and business services accounting for 70,000 jobs. Education and health services added 36,000. State and local governments actually shed 14,000 jobs, CNN Money reported.
These are real jobs, and the unemployment rate for January represents a significant improvement from a year ago. Friday’s jobs report is definitely worth a bit of celebration.
On the other hand ...
As a number of observers have pointed out, the January jobs report masks some serious concerns about the employment situation in this country.
For one thing, another 1.2 million people were classified in January as not being in the work force. Millions of Americans have stopped looking for work, and therefore are not included in the unemployment figures. The economy needs to add roughly 5.6 million jobs to return to the 2008 level.
Additionally, the number of Americans who have been out of work six months or longer, but are still seeking work, has almost doubled since January 2009.
There is a stubborn component to the nation’s joblessness that is making recovery from the current recession more difficult than any economic downturn in the post-war era.
Also, the five-month trend in declining unemployment may not continue. Early last week, the nonpartisan Congressional Budget Office projected that the unemployment rate would rise to 8.9 percent by the end of this year and reach 9.2 percent in 2013. The Federal Reserve Bank also predicted higher unemployment rates later this year.
Much of the CBO’s gloomy forecast is based on slower than anticipated economic growth in 2011. The CBO a year ago predicted that the nation’s gross domestic product would grow by 3 percent in 2011, but it only grew by half that amount.
The CBO was wrong in its predictions a year ago, and it could be equally off the mark this year. Still, the CBO and Federal Reserve forecasts, combined with the problems of the long-term unemployed, provide reasons to temper our enthusiasm as we cheer the otherwise positive January jobs report.