William Katz:  Urgent Agenda

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GOOD ECONOMIC NEWS – AT 9:07 A.M. ET:  And it's a surprise.  The U.S. added 146,000 jobs in November, more than forecast, with the unemployment rate at 7.7%.  We always want good news for the country.  The problem is, this good news comes with several asterisks.

First, 146,000 jobs, although better than forecast, is still anemic.  It takes 150,000 just to keep up with population growth.  Second, this gives ammunition to the Obama administration, which will spin the figures in absurd ways.  The Obama economic and budget policies are catastrophic for this country.  The report from Bloomberg:

Payrolls rose more than anticipated in November and the jobless rate fell to an almost four-year low, indicating superstorm Sandy had little effect on the U.S. labor market.

Employment climbed by 146,000 following a revised 138,000 gain in October that was less than initially estimated, Labor Department figures showed today in Washington. The median estimate of 91 economists surveyed by Bloomberg called for a gain of 85,000. Sandy “did not substantively impact” the data, the agency said. The unemployment rate fell to 7.7 percent, the lowest since December 2008, as size of the labor force shrank.

Stock-index futures advanced as the gain in hiring indicated consumer spending, the biggest part of the economy, will keep expanding. At the same time, concern about more than $600 billion in fiscal tightening slated for early next year threatens growth and may set back employment, one reason Federal Reserve policy makers are weighing increasing stimulus.

“We’re making progress in the labor market,” Michael Gapen, a New York-based senior economist at Barclays Plc, said before the report. “We expect a return to a pace of hiring that suggests we’re moving in the right direction. It’s not as fast as policy makers would like, but employment is growing.”

COMMENT:  I'd be cautious about temporary gains, especially gains that never go above an anemic level.  We've also seen, in recent months, a decline in jobless claims, but they only decline to a certain level, a level that – at just under 400,000 a week – is itself worrying.

The unemployment rate must always be interpreted.  As the story notes, it reflects a shrinkage in the size of the labor force, as more and more people give up looking for employment.

We'll know in six months if this possible good news can be sustained. 

December 7, 2012