Despite Jobs Growth, Economy 'Slogging Along'
U.S. employers added 146,000 new jobs in November and the unemployment rate dropped to 7.7% from 7.9% -- the lowest since December 2008. The consensus was for a jobs gain of just 90,000.
The uptick in jobs was "a pleasant surprise" but the report was "mixed," says Nariman Behravesh, chief economist at IHS. The unemployment rate fell largely because 350,000 Americans dropped out of the labor force, Behravesh notes. In addition, the government revised down the jobs tally for September and October by 49,000.
Behravesh admits he was "surprised" by the faster pace of job creation in November and attributes the shock to an overestimation of Sandy's impact on Northeast employers. The government reported that Superstorm Sandy had a minimal effect on the labor market. The economy could see a bounce in the next few months as thousands of workers are hired to rebuild and reconstruct communities devastated by the storm, Behravesh believes.
"Natural disasters tend to shift the numbers around a little bit," he tells The Daily Ticker's Aaron Task in the attached clip.
Overall, the recent job growth has been consistent with an economy that's "slogging along" and the trend will likely continue through the first half of next year, Behravesh notes.
The jobs report could come up in fiscal cliff negotiations between the president and Speaker John Boehner over the weekend, but the numbers are unlikely to sway a deal one way or another, according to Behravesh. ("I'm not sure if anything will have an impact on those discussions," he quips).
Next year Behravesh expects the unemployment rate to fall below 7% and the economy to expand at a 3% annual rate. As soon as Washington resolves its fiscal issues, "businesses will feel a little more confident and a little less uncertain and will be more forthcoming with hiring," he says.
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