UNEMPLOYMENT HITS 7 PERCENT, A FIVE-YEAR LOW
c.2013 New York Times News Service
After years of frustrating fits and starts in the wake of the financial crisis and the Great Recession, the U.S. economy finally appears to be generating jobs at a healthier, more sustainable pace that many analysts now think will continue into 2014. The official unemployment rate fell in November to its lowest level since 2008.
Employers have hired at least 200,000 workers in three of the last four months, including 203,000 in November. By contrast, as recently as July, when the economy seemed stuck in yet another summer swoon, only 89,000 new jobs were created.
The better-than-expected data from the Labor Department on Friday follows other hopeful economic indicators this week, including an upward revision for economic growth in the third quarter on Thursday and an uptick in manufacturing reported on Monday.
The 7 percent unemployment rate last month is the best reading since President Barack Obama took office, providing one bright spot for a White House beleaguered on many other fronts. The unemployment rate was 7.3 percent in December 2008, the month before Obama was inaugurated.
“The headwinds are fading and the tailwinds are gaining strength,” said Michael Hanson, senior U.S. economist at Bank of America Merrill Lynch, ticking off sources of growth like pent-up demand for automobiles, a rebounding housing sector and the surging stock market.
The stock market rose more than 1 percent after the jobs report, as traders concluded that the prospect of higher employment and faster economic growth outweighed the increased likelihood that the Federal Reserve would soon begin easing back on its stimulus efforts.
While there is a chance policymakers will act when they meet this month, most experts say they believe Fed officials want to see a little more consistency to the data before they begin tapering, probably early in 2014.
“We consider it a strong report but it’s not something that would cause the Fed to move,” said Michael Gapen, senior U.S. economist at Barclays. “Our scenario is still March.”
One reason for remaining cautious is that there have been several false dawns before in the current recovery. And some economists warned on Friday that it was too soon to conclude the labor market had turned a corner.
“We still need more evidence that the economy is picking up momentum before we ring the victory bell,” said Julia Coronado, chief economist for North America at BNP Paribas.