U.S. sees first negative job growth in nearly five years

February 1, 2008

One wonders if the president’s conservative allies are still complaining that the strength of the economy is the “greatest story never told.”

Nervous employers cut 17,000 jobs in January — the first such reduction in more than four years and a fresh sign that the economy is in danger of stalling.

The Labor Department’s report, released Friday, also showed that the unemployment rate dipped slightly to 4.9 percent, from 5 percent, as the civilian labor force shrank slightly.

Job losses were widespread. Manufacturers, construction firms and a variety of professional and business services eliminated jobs in January — reflecting the toll of the housing and credit debacles. The government cut jobs, too. All those cuts swamped job gains in education, health care, retailing and elsewhere.

Wage growth also slowed, another indication that employers are tightening their belts amid the economic slowdown.

Just this week, in his State of the Union, Bush boasted that “America has added jobs for a record 52 straight months.”

So much for our streak.

But what about the slight dip in the unemployment rate, from 5% to 4.9%? Paul Krugman notes that the result isn’t as encouraging as it might sound.

So the new labor report is out, and it says that nonfarm payrolls actually fell last month. On the other hand, employment growth for December was revised up.

You shouldn’t take any of this seriously. For one thing, seasonality is a big problem. There’s normally an employment bulge in December, as stores and others bulk up for the holiday, then a slump in January as they let the extra workers go. The BLS tries to adjust for these seasonal patterns, but because the pattern is always changing, it’s an imperfect process.

A better guide is probably to average the last 2 or 3 months. What you get then is that employment is still growing, but v-e-r-y s-l-o-w-l-y. In particular, employment growth is well short of what’s necessary to keep up with population growth. So even though it’s premature to say that jobs are shrinking, as a practical matter this makes no difference: the truth is that the jobs picture looks moderately dire.

What’s worse, analysts and forecasters weren’t expecting weak numbers for January. The NYT added, “Forecasters had predicted a substantial gain in January payrolls, and early signs pointed to a relatively strong report.”

But that’s obviously not what happened. The Economic Policy Institute’s Jared Bernstein concluded, “This is the clearest signal yet that the job market is either in or teetering on a recession.”

Anyone want to bet that the speech writers knew this number was coming out? No. AWWWWW

  • I got this joke today and would like to share it:
    A Japanese doctor says, “Medicine in my country is so advanced that we can take a kidney out of one man, put it in another, and have him looking for work in six weeks.”

    A German doctor says, “That is nothing, we can take a lung out of one person, put it in another, and have him looking for work in three weeks.

    A British doctor says, “In my country, medicine is so advanced that we can take half of a heart out of one person, put it in another, and have them both looking for work in two weeks.”

    A Texas doctor, not to be out done, says “You guys are way behind. We took a man with no brains out of Texas, put him in the White House and now half the country is looking for work.”

    But we knew that didn’t we.

  • Next:

    “Army chiefs confident of meeting recruitment goals.”

    Bush declares “This proves that our young people believe in our mission in Iraq.”

  • I’m from texas and normally eschew jokes at our expense. Unfortunately, the truth doesn’t care whether you like it or not, cause thats what it is. Good one Rick.

  • It’s all good. In a couple months, our economic stimulus checks will be in the mail. King George will sleep well and all will be right with the world.

  • I think workforce participation is better tool for judging the labor market than unemployment rate. (link). The participation rate increased steadily from 58.6% in 1965 to 64.0% in 1980. It stayed pretty steady until 1985, when it started steadily increasing up to 66.7% in mid-1992. It floated just below 66.7% until mid-1996, when gradually climbed up to 67.3% at the beginning of 2000. Since then, it has gradually declined to 66.1%. So 1.2% of America’s labor pool has stopped working since Dubya took over.

  • There is also a certain amount of Enronomics going into these stats. For example, the 4.9% unemployment is based on the Seasonal Adjusted figure of 2.7 Milllion people. However, the Dept of Labor reports there are 3.3 Million unemployed before the adjustment. There are also 1.7 Million marginally attached workers (unemployed or unverifiable people who sought work in the last twelve months, but not the last four)

  • Did the Fed know that this was coming when they cut the discount rate one-half point earlier this week?

    The Treasury had better hurry up and borrow that $150 billion from the Chinese so we can all get our checks and go shopping ASAP. It’s the least that we can do for our country.

    If the economy is in fact tanking, I hope that it’s at rock bottom on election day.

  • jen # 10. Excuse me, but where have you been? The “aspect” of the country that Bush cares about, the top 1%, have done incredibly well over the last seven years, better than at any other time in history! As a matter of fact, the top 1% are the country, as far as he is concerned. He doesn’t know anyone else exists. 🙂

  • ***Is there any aspect of the country that the Bush adminstration didn’t destroy?***

    If you can call the extrinsic desire to beat a remorseless neocon into an irreversible coma with a toxin-infested Chinese claw hammer “an aspect,” then I’d have to say “yes” to your question, jen….

  • This last year of Bushed is going to be tough to watch – he’s losing his marbles right in front of us! Have you read some of his recent interviews? I don’t think he knows what reality is anymore.

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