Growth in Jobs Overcame Slump In November
Saturday, December 3, 2005
U.S. job growth rebounded in November after stalling for two months, the Labor Department said yesterday, adding to other signs that the economy is expanding briskly despite the recent Gulf Coast hurricanes.
Builders, manufacturers, retailers, health care providers and other employers added 215,000 jobs last month, the biggest gain since July. The nation's unemployment rate held steady at 5 percent, the department said.
The report followed others that showed solid retail sales, factory orders and home sales since the hurricanes, together depicting an economy with plenty of momentum, analysts said. That contrasts with widespread worries right after the storms hit that higher energy prices would cause consumers and businesses to pull back sharply on spending and cause a serious slump.
"Employment growth is now back on track," said Nigel Gault, U.S. economist at Global Insight, a financial analysis firm. The economy "has been more resilient to . . . hurricanes and high energy prices than anyone imagined."
Stock prices were mixed yesterday after Federal Reserve Chairman Alan Greenspan noted the economy's health, reinforcing investor expectations that the central bank will keep raising interest rates in coming months to keep inflation under control.
"The U.S. economy has delivered a solid performance thus far in 2005," Greenspan said in a speech yesterday. "And, despite the disruptions of hurricanes Katrina, Rita and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006."
But Greenspan also warned that growing federal budget deficits threaten the economy in the long term because they could drain increasing amounts of resources from private investment "and cast an ever-larger shadow over the growth of living standards."
President Bush cited job gains, falling gasoline prices, rising consumer confidence, increasing business investment, relatively low unemployment and a strong housing market as evidence that the overall economy "is in good shape."
"Our economic horizon is as bright as it's been in a long time," he said.
Some economists noted less sunny economic signs, including rising poverty, declines in median household income in recent years and the fact that wages have risen more slowly than inflation over the past year, eroding the purchasing power of many households.
"A lot of economic indicators are up," said Jared Bernstein, senior economist at the Economic Policy Institute. "But there are a lot of people in the economy who are still down."
Energy prices shot up and consumer confidence plummeted immediately after Hurricane Katrina devastated parts of the Gulf Coast in late August. Hurricane Rita added to the destruction in late September. More than 560,000 people filed new claims for unemployment insurance benefits because of the two storms, the Labor Department said in a separate report Thursday.