The U.S. economy dropped 85,000 jobs
in December, new data shows. Job losses have mounted every
month since January 2008, with the exception of November 2009, when
4,000 jobs were added, according to revised numbers. The cut of 85,000 is a significant improvement
over just a year ago, when monthly losses were almost ten times as worse.
The numbers are particularly jarring, however, given the optimistic outlook many pundits and economists had expressed for December employment numbers. Many forecast an increase in employment, with several organizations reporting that economists anticipated a more modest loss or even an increase. Today's report defies their optimism from earlier in the week:
- 'Signs of a Recovery' The Wall Street Journal's Kelly Evans projected, "Even if it doesn't show outright hiring in December, Friday's employment report is likely at least to confirm that an economic recovery is underway." She cited "forecasters polled by Dow Jones" in predicting either job growth or a loss of up to 10,000 jobs. "As the economy has resumed growing, 'firms are finding their payrolls so lean they can't really expand production without bringing on new workers,' says Stephen Stanley, chief U.S. economist at RBS Securities."
- Beginning of the End of Job Losses MarketWatch's Rex Nutting nodded, "Has the long drought finally ended? It's possible that, in December, the U.S. economy created more jobs than it lost for the first time in nearly two years." He wrote, "Economists surveyed by MarketWatch are looking for payrolls to rise by a seasonally adjusted 15,000 in December. It would be the first positive number since 120,000 jobs were added in December 2007, the month the recession began."
- Predicted a Fraction of Actual Losses The Minneapolis Star Tribune reported that "the consensus estimate among economists is for a loss of about 23,000 jobs for the month." The paper quoted Heidi Shierholz, who said, "If you look at the trend of the employment changes over the last few months, you see a very steady improvement. If you follow that trend, we should probably have added jobs in December, and that might happen."
- Little or no Losses The Big Picture's Peter Boockvar assured us. "Less bad may turn good today in terms of the labor market. The consensus for Dec payrolls is for a flat reading after an 11k drop in Nov which was more than 100k better than expected (thus watch for possible revision). Whether it’s flat, up 10k or down 10k, we know the pace of firings has slowed but the question of how fast we get job growth still is highly uncertain."
- Split Opinion Among Economists? Reuters polled some economists, finding that "only 9 of 38 -- not including Reinhart's firm [which predicted 40,000 jobs added] -- thought Friday's report would show payroll gains. Six forecast a flat reading and the rest were looking for modest declines."