After several months of promising reports, December's brutally low numbers delivered a sobering dose of reality. Even a welcome decline in the unemployment rate to 6.7% masked bad news. But the key point now is what this jobs report tells us about the health of the U.S. economy, and, in particular,
December jobs report
The unemployment rate, originally reported as 7.7% for November, was revised upward for that month to 7.8%, and stayed the same for December.
The figure was roughly in line with expectations. Estimates for the number of jobs created in December ranged between 140,000 and 160,000.
Non-farm payroll hiring in December was most robust in health care, which created 45,000 jobs. Manufacturing, construction and hospitality also logged strong gains.
Oddly, employment dipped in retail during the holiday-sales month, which is usually the most active time for the sector.
The government also shed jobs, dropping 13,000.
After eliminating some 653,000 jobs from 2008 to 2011, state and local governments kept headcount mostly even in 2012. The decline in December could be attributed to the economic uncertainty hanging over Capitol Hill.
The Pentagon has warned that workers may have to be furloughed if the debate over raising the U.S. debt ceiling, set to be taken up in a few weeks, is dragged out past next month.
Also weighing on government hiring is the pack of problems that will challenge growth, like rising worker pension costs, steep spending cuts and reduced federal funding that will likely kick in during 2013.
As Moody's chief economists told USA Today, "The fiscal headwinds will be blowing hard in 2013."