Modest gains forecast for Jan. jobs report
By Peter Whoriskey,
With the government’s monthly unemployment report expected Friday, economists predicted it will show that the United States added about 150,000 jobs last month, sustaining a modest momentum in the economy.
The emphasis might be on modest.
Although the nation’s number of employed people has been on a stop-and-go rise for two years, it is still about 6 million short of what it was at the peak of the boom in 2007, according to last month’s report from the Bureau of Labor Statistics.
“We’ve dug a big hole, and though we’ve been filling it in, we’ve still got a lot more to go,” said Gus Faucher, senior economist at PNC Financial Services.
At one point in December 2009, the number of employed sank to almost 9 million below the peak employment figure of 146.6 million.
The recent drop in the unemployment rate — which fell to 8.5 percent in December — has added to consumer confidence. But at current rates of growth, it could take more than three years simply to regain peak employment levels.
“We still have a long way to go before the labor market can be said to be operating normally,” Federal Reserve Chairman Ben S. Bernanke told House lawmakers at a hearing Thursday. “Particularly troubling is the unusually high level of long-term unemployment.”
More than 40 percent of people looking for work have been jobless for more than six months, Bernanke said, roughly double the proportion during the boom years.
About 31 percent of the unemployed have been jobless for a year or more.
“The current unemployment rate understates the amount of distress there is in the labor market,” Faucher said.
Economic researchers have just begun to dig into the reasons for the climb in long-term unemployment, which has been one of the defining concerns of the most recent downturn.
Peak unemployment during the 1981-1982 recession was worse, but the average duration of unemployment has been much higher during the recent recession.
Some have speculated that the extension of unemployment benefits made it easier for people to hold off looking for work and lengthened jobless spells. But a paper issued this week by economists at the Federal Reserve Bank of San Francisco appears to dispute that argument. The economists compared the number of unemployed with the number of job openings in the United States and found that the main reason for the spike in long-term unemployment is that there simply are too few jobs to be had.
“It is likely that the recent pattern of massive job losses and a weak jobs recovery is the primary explanation for elevated unemployment duration,” the authors, Rob Valletta and Katherine Kuang, found.
Unemployment applications fell 12,000 to a seasonally adjusted 367,000, the Labor Department said Thursday.