2012 job growth stronger than first reported
The US economy continued its moderate recovery last month as employers added jobs at a steady pace, although not fast enough to lower the nation’s unemployment rate.
But revisions to 2012 data also released Friday by the Labor Department showed stronger job growth than initially estimated, helping to spur a rally on Wall Street that briefly pushed the Dow Jones industrial average above 14,000 for the first time in more than five years. The Dow was 13,995, up 133 points, shortly before 1 p.m.
The nation last year added 335,000 more jobs that first reported, with nearly half of those additional gains coming at the end of the last year. Job gains in December rose to 198,000 from initial estimates of 155,000. In November, the nation added 247,000 jobs -- 86,000 more than first reported, the Labor Department said.
“We’re probably on a slightly stronger jobs trajectory than people had thought,” said Nigel Gault, chief U.S. economist for IHS Global Insight, a Lexington forecasting firm.
In January, the nation added 157,000 jobs while the unemployment rate -- which has not decreased since September -- ticked upward to 7.9 percent from 7.8 percent in December.
Unemployment remains high, Gault said, because employers, who have experienced an uncertain recovery from the recent recession, have been further unnerved by a lack of clear budget priorities by Congressional leaders, who are currently considering whether billions in across-the-board federal spending cuts will take effect in March.
Gault estimates job growth of about 170,000 jobs a month on average for 2013, somewhat less than 181,00o per month added last year.
“The private sector, I think, can and will accelerate, but not this year,” because of the impact of tax increase and budget cuts going into effect this year, he said.
Government cutbacks have already been a drag on economy. Federal, state and local governments sliced 77,000 jobs last year after cutting 317,000 in 2011, according to the Labor Department. Government shed another 9,000 jobs in January.
Arne L. Kalleberg, professor of sociology, University of North Carolina at Chapel Hill and author of, “Good Jobs, Bad Jobs” about the earnings gap between high and low skill work, said that trend is “a real source of concern.”
“These were good jobs, steady, secure and well-paying and they are required if we are going to make investments in our future,” he said. “We’ve got to continue to create jobs, stimulate the economy, and make investments in infrastructure, investments that will pay back instead of decisions that will stop the progress, stop the growth.”
Harvard University economist Kenneth Rogoff said the recent pace of job growth is “mildly positive” and has gradually chipped away at unemployment. But, he said, the economy needs to grow much faster to clear the backlog of unemployed and underemployed workers. More than 20 million Americans are still unemployed, working part-time because they can’t find full-time jobs, or no longer looking for work.
“The economy needs to add 250,000 to 300,000 jobs a month and even then it would take several years to bring the unemployment rate down,” he said, “so this is an economy that’s growing, but not nearly fast enough.”
Rogoff said spending on infrastructure improvements is important to the ongoing recovery, within bounds.
Ultimately, he said, the size of government needs to shrink because state and local government in particular became bloated in the early 2000s, adding jobs “at a ferocious clip.” But he said this may be a good time for government to spend more on roads, bridges, and other public works, even if it means running a slightly bigger deficit.
“We’re running very large deficits and we can’t do it forever, but you want to scale back very slowly,” he said. “I wouldn’t step harder on the brakes right now. The recovery is still very fragile.”Megan Woolhouse can be reached at email@example.com. Follow her on Twitter @megwoolhouse.