January 2013 Jobs Report: 4 Reasons Unemployment Will Stay High
The U.S. Labor Department released the January 2013 jobs report Friday, showing the unemployment rate inched upward from 7.8% to 7.9%.
Employers added 157,000 jobs in January, short estimates of 168,000, which would have kept the unemployment rate stable.
The jobs report included some good news: Revisions to last year's data, customary in January, show the U.S. added 335,000 more jobs than initially reported in 2012, bringing the monthly average for jobs gained to 181,000 from the 153,000 initially reported.
Employment gains for November and December were revised higher by a total of 127,000.
Contributing most to January payroll increases were the retail, construction and healthcare sectors. The government continued to shed workers, a trend that began four years ago.
But the employment outlook remains bleak. Joblessness has proved persistent, with the unemployment rate stuck above an unhealthy 7% for more than four years.
"The good news is that January's employment gains, coupled with large revisions to the prior months, may translate into more consumer spending power. The bad news is that unemployment remains stubbornly high," said Kathy Bostjanic, director of macroeconomics analysis at the Conference Board.
Why the January 2013 U.S. Jobs Report May Surprise You
The U.S. employment picture is expected to show continued signs of improvement when the Labor Department releases January's U.S. jobs report Friday morning.
Projections are for nonfarm payrolls to have gained 168,000 employees during the first month of 2013.
While a decent number, the tally won't be enough to budge the nation's 7.8% unemployment rate.
Forecasts from 90 economists polled by Thomson Reuters range from a 75,000 gain on the low end to a 200,000 gain.
In December, the number was a surprisingly robust 155,000. Over the past two years, the average has been 153,000 per month.
"We started the year on a pretty solid footing. I think the report is going to be a little bit better than what most people think," Steve Blitz, chief economist at ITG Investment Research, told the International Business Times.
But a number of factors could skew data in the U.S. jobs report. Here's what you should watch for.
Here's What a Jump in Pickup Sales Says About the U.S. Economy
The pickup sales growth is one of those unconventional economic indicators that can give investors a deeper insight into what's really happening in the U.S. economy.
That's because most pickup trucks are purchased by people working in the construction trades or agriculture.
So better pickup sales are a good indication of long-term confidence in construction activity by those working in the construction trades and, for farmers, a belief that crop prices will remain higher for another few years.
Along with Ford, GM and Chrysler also have reported growing pickup sales.
Sales of Ford's F-Series pickups in December 2012 totaled 68,787, the best December since 2006 and the 17th consecutive year-on-year increase in monthly F-Series pickup sales. (The Ford F-150 has been the best-selling pickup in North America since 1976 and the best-selling vehicle in North America since 1981.)
FOMC Preview: Will the Fed Continue its $85B/Month Bond-Buying Program?
Investors will be looking to the Federal Reserve Wednesday for clues about how long it might continue its bond-buying program aimed at pushing interest rates down.
The Federal Open Market Committee is expected to release a policy statement at 2:15 p.m. Wednesday, the second day of its two-day meeting.
In keeping with a practice it began last January, the first meeting of the new year will highlight the FOMC's long-term goals and monetary policy.
The Central Bank likely will reiterate the goal it has maintained all of last year: boosting the stagnant U.S. economy.
The Fed's first meeting of 2013 comes after an extraordinarily busy year, capped by two key moves in December.
That's when the Fed said it would continue spending $85 billion a month on bond purchases to keep interest rates low. At the same time, the Fed set unemployment and inflation "thresholds" instead of a date when the central bank expected to be able to raise interest rates.
Are Steep U.S. Spending Cuts Inevitable?
U.S. Rep. Paul Ryan (R-WI), the chairman of the House Budget Committee, is adamant Republicans will resist any further tax increases – a staunch GOP stance that makes steep spending cuts almost certain.
Ryan, the 2012 vice president nominee, told NBC's "Meet the Press" Sunday that the $1.2 trillion worth of automatic spending cuts will take effect because "Democrats have opposed our efforts to replace those cuts with others."
In the NBC interview, Ryan took aim at President Barack Obama.
"I don't think that the president actually thinks we have a fiscal crisis," Ryan said. "He's been reportedly saying to our leaders that we don't have a spending problem, we have a healthcare problem. That leads me to conclude that he just thinks we ought to have more government-run healthcare and rationing."
Will the Debt Ceiling be Good for Gold and Silver?
Investors preparing for Washington's budget battle need to know: Will the debt ceiling be good for gold and silver?
Thanks to recent legislation passed in the U.S. House of Representatives Wednesday, the debt ceiling could be extended until May 19. The bill now moves onto the Senate where it is expected to get the green light, then should be signed quickly by U.S. President Barack Obama.
That gives investors time to prepare for what any budget decision – or indecision – out of Washington will do for their investments.
While the bill leaves the government without a long-term budget strategy, investors ought to have a plan in place.
One thing they can plan on is higher silver and gold, and here's why.
Recession 2013: Can We Avoid It?
The U.S. economy is currently two-for-two in its attempts to skirt recession 2013.
The first came after we narrowly avoided a tumble over the fiscal cliff with a down-to-the-wire deal on New Year's Day. The second came Wednesday with the passage of a three-month extension on raising the debt ceiling.
Had we not averted one or the other, the Congressional Budget Office warned on numerous occasions that a recession in 2013.
But we are not out of the woods just yet, even though the odds may have changed.
Debt Ceiling Bill Includes Controversial "No Pay" Plan
Republicans will vote tomorrow (Wednesday) on a debt ceiling bill that will give Congress nearly four months to make some major budget decisions – or risk losing out on pay.
The bill aims "to ensure complete and timely payment of the obligations of the United States Government until May 19, 2013," according to a release Monday from the House Rules Committee. Exactly how much the $16.4 trillion debt ceiling will be lifted hasn't been discussed.
In a significant shift in GOP strategy, the legislation does not include specific spending cuts, like previously when Republicans have requested dollar-for-dollar cuts to match the debt ceiling increase.
What it could include is a requirement for both the House and Senate to pass a budget by as early as April 15 or have Congress members' salaries held in escrow until one is passed – what the GOP has coined a "no budget, no pay" rule.
"[I]f the Senate of House fails to pass a budget in that time, members of Congress will not be paid by the American people for failing to do their job. No budget, no pay," House Majority Leader Eric Cantor, R-VA, said last week.
Middle Class Decline Under Obama Shown in 5 Charts
U.S. President Barack Obama often makes a point of talking about how important our country's middle class is to our economic growth – something he reiterated yesterday (Monday) in his second inauguration speech.
"Our country cannot succeed when a shrinking few do very well and a growing many barely make it," President Obama said. "We believe that America's prosperity must rest upon the broad shoulders of a rising middle class."
But the financial reality that currently faces the U.S. middle class is not one that can support a country's economic future.
For example, many middle-class workers have lost jobs or taken a pay cut since the president took office in 2009, and the 7.8% unemployment rate is the same as when President Obama first took office.
The labor force participation rate – the percentage of working-age people who are employed or actively seeking jobs – is at its lowest level in over 30 years, and those who are working are making a lower median income than they did 10 years ago.
At the same time, almost half of Americans are unprepared for financial emergencies. About 49% of Americans don't have enough money saved to cover three months of expenses and 28%don't have any money saved, according to a survey by consumer financial services firm Bankrate.com.
Here are five startling charts that outline a middle class decline that's taken shape under President Obama.
Short-Term Debt Ceiling Increase a Strategic Move for GOP
Republicans this week will vote on a short-term debt ceiling increase that gives Washington three more months to agree on budget cuts.
The GOP would approve the short-term increase with the requirement that both the House and Senate pass a budget before the new deadline – or fail to get paid.
The move, according to Republican party strategists speaking to The Washington Post, was designed to give the GOP leverage in the spending cuts fight that will begin in March.
"Republicans have to do a better job of picking our fights," one prominent Republican consultant told The Post. "So, we need more concern about the impact of Obama's reckless spending before we fight with a guy who controls the bully pulpit."
Debates over what to do about the automatic spending cuts, or sequestration, will start before the new April 15 debt ceiling deadline. Republicans want drastic spending cuts, but if Congress can't agree, then deep across-the-board cuts will go into place anyway. Democrats will have to compromise if they want budget cuts other than the sequester.
The GOP compares this to the president's position in the fiscal cliff fight, when Democrats wanted tax hikes on the rich.
"In the fiscal cliff fight, the president had greater leverage because current law was on his side," a House Republican aide told The Post, noting that if nothing was done on the cliff taxes would have gone up on all Americans. By contrast, the aide added, "in the sequestration fight, we have greater leverage because current law is on our side."