January 15th, 2014 11:38 AM by Nick Rapplean
Employment December’s employment scores came in last and while the unemployment rate went down to 6.7 percent, according to the figures released by the Bureau of Labor Statistics, the news was not as bright as was hoped. The economy added only 74,000 jobs in December with the number of unemployed Americans dropping by 490,000 people, to 10.4 million workers. So how did the number of unemployed people drop so greatly when the economy saw its lowest level of new jobs added in three years? Because 347,000 people left the labor force, pushing the labor force participation down by 0.2 percent to 62.8 percent. This was the lowest rate since 1978. Moreover, employees that do have jobs didn’t see much crow about in December. The average workweek notched down by 0.1 hour to 34.4 hours for the month, and average hourly earnings only increased 2 cents to $24.17. For the year, average hourly earnings grew by a total of 42 cents, or 1.8 percent overall, and average hourly earnings of private-sector production and non-supervisor workers increased by 3 cents to $20.35. Initial Jobless Claims December’s rough job report was tempered by the most recent initial jobless claims report from the Employment and Training Administration, which reported last week that first-time claims for unemployment filed by the newly unemployed during the week ending Jan. 4 dropped to 330,000. This marked a decrease of 15,000 claims from the previous week's revised figure of 345,000. The four-week moving average, which is a more reliable figure as it is not as subject to variations as the weekly figure, totaled 349,000 claims, a decline of 9,750 from the prior week's revised average of 358,750. Consumer Credit While employment watchers probably exhaled in dejection, followers of consumer credit likely breathed a sigh of relief last night when the Federal Reserve reported that U.S. consumer borrowing grew by 4.8 percent in November to $3.08 trillion. Non-revolving debt, such as student loans and car loans, comprised the lion’s share of the growth, increasing by 6.4 percent to $2.23 trillion. What was encouraging to many was that revolving debt, such as credit card spending notched up 0.6 percent to $856.9 billion. While not as big as October’s 5.6 percent increase in revolving debt, a sustained willingness on the part of consumers to whip out the plastic for retail and online transactions speaks to increased consumer activity. Consumer spending is important because it drives roughly 70 percent of the economy and is key to any meaningful recovery. “Credit conditions are improving,” IHS Inc. chief economist Nariman Behravesh told the Bloomberg news service. “We are seeing consumers beginning to take on more debt, and that’s part of the recovery.”