Dismal December Jobs Report Tells Us What the Government Doesn't Want To

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After several consecutive months of job gains near or above 200,000, the streak came to an abrupt halt with the December jobs report – reminding everyone how fragile our economy still is.

Payroll growth last month slowed to the slowest pace since January 2011. Employers added a skimpy 74,000 jobs in December, Friday's Labor Department report revealed.

That was well below even the most cautious expectations.

Surveys showed economists expected gains of 197,000 to 205,000, with the unemployment rate remaining at 7%. Many analysts raised projections after Wednesday's report from private payroll processing firm ADP showed businesses added 238,000 jobs in December, the most in 13 months.

The lackluster job creation wasn't the only "surprise" in the December jobs report. The unemployment rate unexpectedly fell to 6.7% from 7%, marking the lowest level since October 2008.

Digging into the reasons behind the drop shows just how troubling this situation is. That's because the decline was due to some 347,000 discouraged Americans simply dropping out of the work force.

"Despite the good headline news (the dip in the unemployment rate), the U.S. economy is still experiencing problems stemming from the 2008 mortgage crisis," Steven Pressman, Professor of Economics at Monmouth University in Long Branch, NJ, told Money Morning. "A good part of the unemployment rate decline was due to people giving up and not looking for work. These people don't get counted as unemployed because they're not seeking work. The decline in the employment population ratio to 62.8%, the lowest rate since 1978, reinforces this. A number like this can only be regarded as disturbing."

Disturbing indeed. The number of people not in the workforce swelled by 525,000 in December to 91.808 million. That's a huge exodus of people leaving the employment arena. And the figure dwarfs the meager number of jobs created.

More Disturbing December Jobs Report Details

Other labor market indicators highlighted in the December report are also bothersome:

Join the conversation. Click here to jump to comments…

  1. H. Craig Bradley | January 10, 2014

    A WARM, FUZZY FEELING

    The FED has NO IDEA what the economy is doing at any point, as their data is obviously unreliable. They are flying blind, making it up as they go along.

  2. Robert in Vancouver | January 13, 2014

    I think the Fed will do a little more tapering before the mid-term elections to give the Democrats a boost. They will say the economy is improving and there is room to taper more.

    This will be used in Dems election speeches and media supporters over and over "We have created millions of jobs and boosted the economy, blah, blah, blah, and the proof is that the Fed had to taper more because we are doing such a good job, blah, blah, blah." "Period."

    Then after the election the Fed will reverse it's tapering and go back to $85 billion/month or higher.

    There is no viable alternative to printing a lot of money as long as the government is spending more than it takes in. "Period."

    Plus, interest rates on federal debt will keep going up which will force the Fed to print more than ever just to keep up. "Period."

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