Friday, December 15, 2017
Business

Unemployment rate isn't something to celebrate

WASHINGTON — Groan. Ugh. Sigh.

Select your own preferred grunt in response to the December employment report, which in an instant made the progress the U.S. economy has been showing look more questionable. The nation added only 74,000 jobs in December, the weakest showing since the start of 2011, and far below the 205,000 monthly average the three previous months.

The unemployment rate fell to 6.7 percent, the lowest since October 2008. But this apparent good news has a dark lining: 347,000 people dropped out of the labor force while only 143,000 additional people reported having a job. Interestingly, a broader measure of unemployment that captures people who have given up looking didn't budge (13.1 percent).

Here's a go at putting a positive spin on these numbers: They just can't be real. All other evidence we have on the economy is inconsistent with a mere 74,000 newly added jobs, and in fact is more consistent with the 200,000-ish levels of previous months. Manufacturing surveys report strong output. Trade numbers look favorable. Business investment appears strong. Indeed, overall GDP growth for the second half of 2013 looks the strongest in years.

And jobs numbers become erratic around the holidays due to seasonal adjustment. The Labor Department adjusts the numbers to account for the routine passing of the seasons, but the spike in holiday employment around Christmas combined with winter weather to disrupt economic activity means those adjustments can create distortions that tell us nothing about how the economy is really doing. Indeed, the Labor Department specifically identified bad weather as a possible factor in a 13,000 drop in specialty trade contractors.

And the December report actually revised previous months' job-creation totals up by 38,000 positions, not at all the kind of revision you would expect to see if job growth was really falling off a cliff.

So, the usual caveats around the jobs numbers — it is one month's number, with a big range of error around it — apply more than usual in this one. Still, one doesn't envy the policymakers who have to decide what to do based on this shaky data.

The Federal Reserve's policy committee meets at the end of the month and will have to decide whether to continue "tapering" their bond-buying program. They have signaled that they'll reduce their quantitative easing program by $10 billion or so per meeting, from $85 billion in December to $75 billion in January to, potentially, $65 billion in February.

But they've also signaled that the wind-down could move faster or slower depending on the data, and the weak December numbers will likely make at least some of the central bank's officials want to slow down and wait for evidence that the new report was an aberration before continuing the taper. Already, one official (Eric Rosengren of the Boston Fed) dissented in December, wanting more evidence that the jobs recovery was firmly entrenched.

What they will do about that is hard to guess, as we don't have a lot of solid guidance yet on just how sensitive the Fed's tapering strategy will be to incoming data. More plausible is that they will revisit their 6.5 percent unemployment rate "threshold" at which they will begin considering a hike in short-term interest rates. That seemed sensible when it was introduced in December 2012, but since then the unemployment rate has fallen much more than job growth alone would justify, as Americans have left the labor force in surprisingly large numbers. Look for a heightened debate over changing the threshold in the weeks ahead.

Comments
Pack your bags: 107.3M Americans to set holiday traveling record

Pack your bags: 107.3M Americans to set holiday traveling record

A record-breaking number of Americans are expected to travel this holiday season.The American Automobile Association projects that 107.3 million Americans will pack their bags and travel more than 50 miles by planes, trains, automobiles and other mod...
Updated: 8 hours ago
Local widowers say baby powder caused their wives’ cancer

Local widowers say baby powder caused their wives’ cancer

Two Tampa area widowers whose wives died of ovarian cancer are suing Johnson & Johnson, joining nearly 5,000 other plaintiffs across the country who blame their illness on the daily use of the pharmaceutical company’s talcum powder.Bryan Isa’s wife, ...
Updated: 10 hours ago
Jabil’s fiscal results top Wall Street expectations

Jabil’s fiscal results top Wall Street expectations

ST. PETERSBURG — Jabil Circuit Inc. beat Wall Street expectations for both profits and revenue Thursday.The St. Petersburg-based contract electronics manufacturer — one of Tampa Bay’s biggest public companies — posted fiscal first-quarter earnings of...
Updated: 11 hours ago
Soccer store opens on Gunn Highway, just in time for the World Cup

Soccer store opens on Gunn Highway, just in time for the World Cup

Even though the United States Men’s soccer team didn’t qualify for the 2018 FIFA World Cup, that hasn’t diminished local fans’ excitement about the upcoming international event.Ariel Martinez, owner of Best Buy Soccer and Lacrosse, has already receiv...
Updated: 12 hours ago
Tampa chamber names first companies for minority business accelerator

Tampa chamber names first companies for minority business accelerator

TAMPA — Four firms in marketing, construction and secure cash logistics will be the first to go to through a new Greater Tampa Chamber of Commerce program designed to help black- and Hispanic-owned companies grow their businesses through two years of...
Published: 12/14/17
FCC votes down Obama-era ‘net neutrality’ rules

FCC votes down Obama-era ‘net neutrality’ rules

NEW YORK — The Federal Communications Commission has voted on party lines to undo sweeping Obama-era "net neutrality" rules that guaranteed equal access to internet.The agency’s Democratic commissioners dissented in the 3-2 vote Thursday.The FCC’s ne...
Published: 12/14/17
From Crystal River to Brooksville, branch out to shop on these unexpected main streets

From Crystal River to Brooksville, branch out to shop on these unexpected main streets

You don’t have to stare at a greeting card to picture a bustling old main street lined with decorated shops and lampposts. Historic small-town shopping districts are easy to find, and more charming than Walmart. Beyond the downtowns of St. Pet...
Published: 12/14/17
American Social booming on Harbour Island

American Social booming on Harbour Island

HARBOUR ISLAND — Downtowners, conventioneers, hockey fans, concert-goers and anyone hungry for waterfront dining are discovering American Social Bar & Kitchen on Harbour Island. Panoramic views, accessible boat slips and walkability to Amalie Arena a...
Published: 12/14/17
A healthy dining option opens in Downtown Tampa

A healthy dining option opens in Downtown Tampa

SOUTH TAMPA— Vale Food Co., a health food restaurant, hopes to make its mark on the bay area foodie scene with the opening of its first location in Tampa.In 2014, Sunny Ilyas was a Florida State student trying to find an affordable, healthy meal for ...
Published: 12/14/17

Tampa Bay is above average in minority homeownership

Tampa Bay ranks 22nd among the nation’s 45 largest metro areas in the percentage of minority homeowners. According to Abodo, an online apartment marketplace, 46.2 percent of minorities in the bay area own their homes, which have an average value of $...
Published: 12/14/17