Jobs are on everyone’s mind this week with the big employment report due out tomorrow. Here is what Fed Chairman Ben Bernanke had to say about the jobs situation this morning in Congressional testimony:
“Household spending will depend heavily on developments in the labor market. Overall, the jobs situation does appear to have improved modestly over the past year: Private payroll employment increased by about 160,000 jobs per month in 2011, the unemployment rate fell by about 1 percentage point, and new claims for unemployment insurance declined somewhat. Nevertheless, as shown by indicators like the rate of unemployment and the ratio of employment to population, we still have a long way to go before the labor market can be said to be operating normally. Particularly troubling is the unusually high level of long-term unemployment: More than 40 percent of the unemployed have been jobless for more than six months, roughly double the fraction during the economic expansion of the previous decade.” *
One thing that Bernanke omitted there was the drag from public sector layoffs, so total job growth was more like 140,000 per month. For January, the consensus is now looking for 155,000 total, and 168,000 private sector job gains. That is a slowdown from the December level of 200,000 total and 212,000 in the private sector, but well above the average for all of 2011. The unemployment rate is expected by the consensus to be unchanged at 8.5%.
Do you think that tomorrow’s jobs report will do better or worse than the consensus is now projecting? Do you think the rate of job growth for all of 2012 will accelerate or slow from the 2011 pace. I am cautiously optimistic on both fronts. The lower unemployment claims we saw this morning are pointing that direction, and the ADP report on Wednesday showed a gain of 175,000 private sector jobs for January, although last month its’ estimate was much higher than the BLS number at 325,000 (revised down to 292,000. Also in each of the last four months, the number of jobs created according to the separate household survey (the one used to calculate the unemployment rate) has been far higher than the one produced by the establishment survey. The Household survey is probably much better at picking up job creation from start up companies.
What are your thoughts?
* You can read the rest of Bernanke's testimoney here: http://www.federalreserve.gov/newsevents/testimony/bernanke20120202a.htm
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