The Labor Department reported on Jan. 4 that the U.S. economy added only 18,000 jobs in December, after posting an 115,000 gain in November. Economists expected a 70,000 gain in December. The unemployment rate rose to 5.% as well.
Job growth in several service-providing industries, including professional and technical services, health care, and food services, was largely offset by job losses in construction and manufacturing, according to the department.
"These jobs data are the strongest evidence so far that the economic expansion is grinding to a halt. These jobs gains indicate economy did not enter a recession in the fourth quarter of 2008. The economy added 101, 000 jobs per month, as compared to 93,000 and 139,000 in the third and second quarters, respectively," explains Peter Morici , a professor at the University of Maryland School of Business and former Chief Economist at the U.S. International Trade Commission. "Nevertheless, the subprime mortgage crisis is biting and the economy is headed south. Jobs growth is much less than the 115,000 necessary to keep even with labor force growth at one percent a year. Slow jobs growth, along with the shortages of mortgage and business credit, declining home prices and residential construction, and falling industrial production, indicate the risk of a recession for 2008 is high."