Council of Economic Advisers Blog

The Employment Situation in December

Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression. It is critical that we continue the economic policies that are helping us to dig our way out of the deep hole that was caused by the recession that began at the end of 2007.  Most importantly, we need to extend the payroll tax cut and continue to provide emergency unemployment benefits through the end of this year, and take other steps the President has proposed in the American Jobs Act.

Private sector payrolls increased by 212,000 jobs and overall payroll employment rose by 200,000 jobs in December. The unemployment rate fell 0.2 percentage point to 8.5 percent, the lowest level since February 2009. The drop in unemployment over the month was mostly due to employment growth, not lower labor force participation. The unemployment rate has fallen by 0.9 percentage point in the last 12 months. Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 22 straight months, for a total of 3.2 million payroll jobs over that period. In the last 12 months, 1.9 million private sector jobs were added on net, more than in any year since 2005. Nonetheless, we need faster growth to put even more Americans back to work.

Sectors with net job increases in December included transportation and warehousing (+50,200), health care and social assistance (+28,700), retail trade (+27,900), manufacturing (+23,000), leisure and hospitality (+21,000), and construction (+17,000).  Local governments lost 14,000 jobs and state government employment was unchanged.

The monthly employment and unemployment numbers are volatile and employment estimates can be subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.

The Employment Situation in November

Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression, but the pace of improvement is still not fast enough given the large job losses from the recession that began in December 2007.   

Private sector payrolls increased by 140,000 in November and overall payroll employment rose by 120,000. The unemployment rate fell 0.4 percentage point to 8.6 percent, the lowest unemployment rate since March 2009.  About half of the drop in unemployment in the household survey was due to a decline in the labor force (-315,000) and about half to employment growth (+278,000).  Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 21 straight months, for a total of 2.9 million jobs over that period.  Nonetheless, we need faster growth to put more Americans back to work.

 While the U.S. economy is healing, the world economy continues to be in a fragile state and all economies are linked through trade and finance.  In this environment, the President’s American Jobs Act is the right medicine to sustain and strengthen the recovery.  In particular, with 13.3 million Americans still unemployed, and 43 percent of them unemployed for 6 months or longer, it would be a setback for the economy and American families if Congress were to allow extended unemployment benefits to expire at the end of the year. The President’s proposal to extend and expand the payroll tax cut for workers and small businesses also would provide a substantial boost to economic growth and job creation. 

Sectors with employment increases in November included retail trade (+50,000), professional and business services (+33,000), leisure and hospitality (+22,000), health care and social assistance (+19,000), and manufacturing (+2,000).  The temporary help services industry, which is often a leading indicator of future job growth, increased for the fifth month in a row, by 22,300.  Sectors with employment declines included government (-20,000) and construction (-12,000).  State and local governments lost 16,000 jobs and have shed 430,000 jobs since February 2010. 

The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.