Job Growth slows in December: The U.S. economy added 108,000 jobs in
December, only about half of what was expected, but 2005 came in as the second
straight year that American employers added more than 2 million workers,
government figures showed.
The unemployment
rate dipped below 5 percent to 4.9 percent in the last month of the year and
labor costs rose, according to figures released today by the Labor Department.
Revised job growth figures for October and November showed that 71,000 more
jobs were added in those two months than first reported.
Economists had
forecast an addition of more than 200,000 jobs in December and the lower figure
suggested companies may be shying away from hiring and relying instead on
productivity gains to meet demand. Job losses in construction, retail and
transportation offset job gains in manufacturing, professional and business
services, education and health services and government.
"The December
payroll figure was sharply weaker than expected, but practically everything
else was surprisingly strong," said Stephen Stanley, chief economist at
RBS Greenwich Capital. "It appears to me that the unusually frigid weather
during the survey period helped to dampen hiring." http://www.washingtonpost.com/wp-dyn/content/article/2006/01/06/AR2006010600377.html
With Consumers Wary, Bush Summons Cavalry
By Joel Havemann
and Warren Vieth, LA Times Staff Writers, January 6, 2006
WASHINGTON — Frustrated that Americans are giving him low marks for economic
stewardship, President Bush and about two dozen of his top aides will hit the
road today to argue that the economy is in better shape than many people think,
and that Bush deserves some of the credit.
They may find that much of the nation is skeptical.
Polls show that
more than half of the public thinks the economy is in bad shape and that Bush
is doing a poor job of managing it. In one recent survey, 3 in 10 participants
said the country was in a recession, even though the economy has grown for the
last 2½ years.
Workers and consumers have reasons to be anxious. Although the economy as a whole is growing, many analysts
attribute its progress in part to a far more competitive — and less secure —
workplace.
"This Darwinian
economy has got people concerned," said John R. Stanek, chairman of ISR, a research
firm in Chicago that conducts worker surveys. "If you feel there's a
decent chance you may be laid off — and over a third of U.S. workers feel that
could happen to them — you're not going to stop looking over your shoulder. You
realize that the laying off of you may be part of the 'good things' that are
happening to the overall economy."
David Kelly, managing director of Putnam Investments in Boston, said job
insecurity was moving from factory floors to front offices, thanks in
particular to outsourcing of jobs overseas.
Consumers, who have
propped up the economy for years, may be running out of gas. The consumer confidence index of the
Conference Board, a business-sponsored research group, has bounced back from a
dip after Hurricane Katrina, but it remains just above its level of 1985, when the unemployment rate averaged 7%, a full 2 points
higher than today's. Consumers are satisfied with present conditions but
gloomier about prospects six months out.
"Employment gains haven't been that strong,"
said Lynn Franco, the board's director of consumer research. "Consumers need to
see consistent strong job growth, but instead the economy takes one step back
for every two it takes forward."
Consumers are also concerned because average hourly earnings of production
workers and nonsupervisory personnel are not keeping up with inflation.
Healthcare bills are rising and energy costs — gasoline last fall, heating oil
and natural gas now — are draining cash from wallets.
For years, consumers have compensated by borrowing against the value of their
homes. As a result, their spending has exceeded their after-tax income for the
last six months. But now the housing market, especially in urban areas on the
coasts, appears to be cooling, potentially shutting off this source of cash.
Kelly said Bush's basic problem was that he had a tough act to follow — the
booming economy of the late 1990s.
It is true, as Kelly said this week and Bush and his cavalry will no
doubt say today, that the recent unemployment rate is lower than the average
for any of the last three decades. The unemployment rate stood at 5% in
November. Today, the government will issue December's.
But the job growth that
Bush trumpets — an average of about 150,000 a month in the last 2½ years —
pales beside the 240,000 average monthly growth from 1995 through 1999. Worse
yet, the 2001 recession cost so many jobs that although about 2 million more
Americans are employed now than when Bush took office, the increase is not
enough to keep up with population growth. So, the jobless rate has risen from the 4.2% rate of
Bush's first month in office.
In an ABC News/Washington Post survey released this week, 60% of participants
described the economy as "not good" or "poor"; 61% in a
Gallup survey in mid-December rated it no better than "fair." In a
National Public Radio survey released this week, 54% disapproved of the way
Bush was handling the economy, and 59% said the same in a poll conducted in
mid-December by the American Research Group. In the latter survey, 28% said the
economy was in a recession.
Many analysts say the
public is more pessimistic than the economic data warrant. Growth is not the
only bright spot. Productivity has risen rapidly. Small businesses are
thriving. Homeownership and household net worth have hit all-time highs.
Karlyn H. Bowman, a public opinion analyst at the conservative American
Enterprise Institute, said apprehension about the war in Iraq might be souring
opinions on seemingly unrelated issues. "The
negative perceptions of Iraq seem to be washing over all of the good news about
the economy," Bowman said.
To get the good news out front, White House officials have organized a one-day sales blitz promoting their economic stewardship.
While Bush is talking up the economy before the Chicago Board of Trade, Vice
President Dick Cheney will be at a Harley-Davidson motorcycle plant in Kansas
City. Treasury Secretary John W. Snow will drop in on the New York Stock
Exchange. Three other Cabinet secretaries and at least 17 deputy and assistant
secretaries and assorted other officials will make appearances from Miami to
Seattle.
White House advisors said the sales blitz reflected an administration consensus
that perceptions of Bush's economic leadership had been undermined last year by
his ill-fated campaign to restructure Social Security and the political furors
associated with the Gulf Coast hurricanes, Supreme Court vacancies and the war
in Iraq. "This was actually
something they started to do last summer, but they got completely sidetracked
by hurricanes and court openings," said GOP strategist Charles Black.
The White House's frustration was echoed when Bush advisors and GOP leaders met
recently at a Maryland resort to plan strategy for 2006. House Speaker J.
Dennis Hastert (R-Ill.), usually a low-key, team player, chastised White House
aides for not doing more to communicate how much the economy was improving,
officials who attended the meeting said.
But economists argue
that a public relations offensive can be no more effective than economic
circumstances allow.
And Kelly, for one, said the recovery from the 2001 recession left a lot of
Americans behind. He likened the economy to an hourglass, with some in the
middle class moving upward but many squeezed down into lower income brackets.
Jared Bernstein, an economist with the Economic Policy Institute, a labor-affiliated research group, said workers lacked
the clout to fight for higher wages because their job tenure was increasingly
shaky. The median hourly wage fell
1.3% short of keeping up with inflation in the 12 months ending in November,
Bernstein said. For
workers near the bottom of income distribution, the decline was 2%; workers
near the top, by contrast, gained 0.7%.
Bernstein is worried about the debt burden on working families, which is growing
as fast as interest rates rise. In the third quarter of last year, he said,
total obligations on home mortgages, consumer debt and car leases totaled 17%
of after-tax personal income, their highest level since records were begun in
1980.
Times staff writer
Janet Hook contributed to this report.
http://www.latimes.com/news/nationworld/politics/la-na-bushecon6jan06,1,1814705.story?coll=la-news-politics-national
