The November jobs report gave a mixed message on the state of the economy. That seems appropriate given the way 2012 has been, but it clouds
the outlook for savings accounts and other deposits
A strengthening economy would be a potential boost for interest rates on savings accounts and
money market accounts
, which have largely been near zero in 2012. In recent weeks, the economy seemed to be gathering momentum as it headed towards the new year, but this employment report paints a less optimistic picture.
What to make of job growth?
The Bureau of Labor Statistics announced that U.S. employment grew by 146,000 jobs in November. That's a solid if not spectacular number, but disappointing in the context of previous reports, which showed 148,000 new jobs in September and 171,000 in October.
What's worse is that those prior figures were revised downward significantly -- September's from 148,000 to 132,000 and October's from 171,000 to 138,000. That's a total of 49,000 fewer new jobs than previously thought. Subtract those downward revisions from November's figure, and the latest report actually represented an increase in overall employment of less than 100,000 new jobs.
To put this in context, here is a scorecard you can use to evaluate the strength of these monthly employment reports in the current economy:
- Negative job growth = slipping towards recession
- Less than 100,000 new jobs = anemic growth
- Between 100,000 and 200,000 = mildly encouraging
- Between 200,000 and 300,000 = a clear step in the right direction
- Over 300,000 new jobs = an economy running full steam ahead
The weakness of the November job report may not square with something you might have heard about that same report, which was that the unemployment rate dropped from 7.9 percent to 7.7 percent. However, that corresponds almost exactly with a 0.2 percent drop in the labor participation rate, meaning that a smaller portion of the population was active in the labor force last month (i.e., either working or actively looking or a job). When people drop out of the labor force, it is often a sign that they are discouraged about the job market.