More bad news for the Obama Administration as the Labor Department releases their unemployment report. According to a new USAToday report, “The job market showed another weak gain last month as employers only added 113,000 jobs.” The Labor Department noted that the unemployment rate fell a measly 6.6% from 6.7%. Economist also determined approximately 185,000 jobs were added last month, according to their median forecast.
Where were the new jobs added in January?
According to unemployment report, private companies added an estimated 142,000 jobs while the Federal, state and local governments cut 29,000. Jobs were added in a wide variety of business sectors with construction companies adding the most job with 48,000; business services came in a close second with 36,000 new jobs and hospitality added 24,000 new jobs. The Labor Department also noted that the number of hours worked remained relatively constant at 34.4 hours, and earnings increased slightly by five cents to an estimated $24.21.
Experts also note that even if the unemployment rate seems fine, the greater concern for the economy of the United States is what the administration is hesitant to discuss: the underemployment rate. The underemployment rate, which includes people who are working fewer hours then they would like or who have given up finding employment, remains very high. Although this unemployment rate did decline this month, it remains at 12.7%.
What’s to blame for the high unemployment rate?
Since no one wants to take blame for the high unemployment rate by reviewing economic policies, experts have pointed to the weather. They first noted weather could have been a contributing factor to slow employment gains in December when the average gains we saw from August to November slowed. The same unemployment issue is present again in January. Although some experts hoped the weather would clear in December and workers would return to work in January, the bad weather continued and unemployment totals remain high.
Other experts argue that although the weather might be partly to blame for unemployment, the drop in gains was to be expected. As one Wells Fargo Chief Economist, John Silivia explained, “The labor market likely also was simply offsetting outsized job gains of more than 250,000 in both October and November. The job market is probably 190,000 to 200,000. We are getting payback.”
Strong housing market not bringing huge employment gains
Economists believed that job gains would be stronger this year because of the increased economic activity, improved housing market and lower household debt. The results did not quite match expectations. According to USAToday, the question of job growth has left many “to wonder whether the Federal Reserve will pause in its plan to steadily reduce its government bond purchases that are intended to hold down interest rates and stimulate the economy and labor market.”
The next scheduled meeting for the Federal Reserve is March 18-19. At that time the Federal Reserve will review its bond purchasing strategies. Many question if the Fed can ever stop buying bonds or if they will continue to claim the United States has not fully recovered from the Great Recession.
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