Any politicians still celebrating their tiny victory in heading off the fiscal cliff need look no farther than today's federal jobs report to know that the real work of healing the economy remains ahead of them.
Ball State economist Michael Hicks said today’s job report underscores his belief that recovery from the Great Recession will be anemic for the long term.
The U.S. Labor Department reported today that the economy added about 155,000 new jobs in December. The jobless rate remained at 7.8% as about 12.2 million Americans continued to be unemployed.
“The current employment summary is just further evidence that the U.S. economy is stuck in neutral,” says Hicks, director of Ball State’s Center for Business and Economic Research (CBER). “Because of congressional inaction, there was no Superstorm Sandy rebound as well as no boost from holiday spending. This is simply another month of growth so slow as to ensure the economy will not recover in this decade.”
He says the economy will suffer from the expiration of a two-year payroll tax “holiday” enacted two years ago.
“The payroll tax increase, which took effect at the beginning of January, and the continued threat of federal spending cuts ought to ensure that we continue to see no improvement in the months to come.”
Also unimpressed with the December numbers was economist Alan Tonelson of the U.S. Business and Industry Council, who said "despite widespread claims of an American industrial renaissance and numerous reports about manufacturing job reshoring, the sector's employment performance has continued to lag that of the entire economy throughout the recovery."
"With the December improvement in manufacturing employment, the sector has now regained 263,000 (13.03%) of the 2.018 million jobs it lost on net during the recession. And manufacturing employment now represents 8.94% of all nonfarm jobs – actually down from the end-of-recession figure of 8.98% and from its 9.96% share when the recession began. (Manufacturing employment bottomed in January, 2010 – several months after the recession technically ended. At that point, its share of total employment had fallen to 8.86%. Therefore, manufacturing has regained 530,000 of the 2.195 million jobs it lost from the recession’s end to this trough – 24.15%.)
