Weekend Economists at War! January 10-12, 2014

[Demeter]

42. THE (UN)EMPLOYMENT SUBTHREAD

U.S. job growth falters as cold weather grips nation

http://news.yahoo.com/solid-job-gains-seen-december-u-economy-picks-110815918--business.html

U.S. employers hired the fewest workers in nearly three years in December, but the setback was likely to be temporary amid signs that unusually cold weather may have had an impact.

The surprisingly weak job growth figures reported by the Labor Department on Friday, however, could cause some discomfort at the Federal Reserve, which last month announced plans to scale back its massive monetary stimulus program.

Nonfarm payrolls rose only 74,000 in December, the smallest increase since January 2011 and well short of the 200,000 jobs or so that most economists had expected.

While the unemployment rate fell 0.3 percentage point to 6.7 percent, its lowest level since October 2008, the decline mostly reflected people leaving the labor force....

Growth in Jobs Slows Sharply to 3-Year Low

http://www.nytimes.com/2014/01/11/business/economy/us-economy-added-only-74000-jobs-in-december.html

Just when it seemed as if the economy was finally accelerating, the latest employment figures once again confounded expectations of better days ahead.

The government said on Friday that employers added jobs at the slowest pace in three years in December, reversing three months of steadily rising hiring that had persuaded economists and policy-makers at the Federal Reserve that the labor market had finally turned the corner...the unexpectedly grim data immediately set off a debate among economists as to whether they were an anomaly or an indication of a more significant slowdown in the economy.

But even after accounting for factors like cold temperatures and snow that may have inhibited hiring, many experts cautioned that other trends, like average hourly earnings and the labor participation rate, were hardly encouraging.

“What it does say is that we’re not in takeoff mode in the labor market,” said Julia Coronado, chief United States economist at BNP Paribas. “It’s not so much weakness in hiring as lack of vitality. We’re treading water.”

... The work force shrank by 347,000 in December, reversing a big gain from November, and returning the proportion of Americans in the labor force to its October level of 62.8 percent, the lowest in 35 years...Among workers aged 45 to 54, the participation rate dropped 0.4 percentage point to 79.2 percent, the lowest since 1988. For workers 55 and older, the participation rate edged down only 0.1 percentage point. “It just keeps dropping and dropping,” she said. “It’s depressing, as it’s not just older workers retiring.”

INTERESTING CHOICE OF WORD THERE..."DEPRESSING"

Will Bad Jobless Data Spur Action On Unemployment Insurance?

http://www.npr.org/blogs/itsallpolitics/2014/01/10/261458030/will-bad-jobless-data-spur-action-on-unemployment-insurance?ft=1&f=1001

Just as the Senate seemed to descend into another round of partisan gridlock, this time over extending emergency jobless benefits, the arrival of a surprisingly weak December jobs report raised the pressure on Congress to act.

The question is whether news that the economy created a mere 74,000 jobs last month — far fewer than the 200,000 forecasters predicted — delivered enough of a jolt to Capitol Hill, where what seemed like bipartisan progress on the issue early in the week had reverted to partisan nastiness.

Majority Leader Harry Reid, D-Nev., used Friday's underwhelming jobs report to argue for Congress to extend the unemployment insurance program. "Today's report shows why Republicans must join with Democrats to immediately extend emergency unemployment insurance for the 1.4 million Americans whose benefits were cut off in December," he said...On Tuesday, legislation to extend jobless benefits surprisingly cleared a procedural hurdle in the Senate with bipartisan support. But things started coming apart after Reid denied Republicans the opportunity to offer amendments to the bill, charging them with obstruction and other acts of bad faith. That resulted in several Republicans withdrawing support.

By Friday, Reid was willing to consider a certain number of GOP amendments, so long as they were "relevant," a Reid aide told WAPO.

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When the Senate returns to work next week, two unemployment insurance bills offered by Democrats will be waiting. A bill introduced by Jack Reed, D-R.I., and Dean Heller, R-Nev., would extend emergency jobless insurance benefits for only three months, the idea being that it would allow Congress to buy time to reach a longer deal. Majority Leader Reid, meanwhile, has offered a bill to extend benefits for 11 months. It would offset the $17 billion cost by extending the mandatory budget cuts from sequestration. For different reasons, Senate Republicans and some House Democrats aren't fans of that idea...