This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Why The Jobs Report Was Better Than You Think

NEW YORK (TheStreet) -- There were a lot of positives to take from the November jobs report apart from the headline that the U.S. unemployment rate dropped to 7%, a five-year low.

Chief among them was that the labor force expanded, meaning that the decline in the unemployment rate wasn't due simply to fewer people looking for work. The labor force actually grew by 450,000 in November, while household employment increased by 818,000. Those are big numbers. Additionally, the number of people working part-time declined by 330,000. 

"A lot more people are working and more of the people who are working are working full-time that had been working part-time before-- and that's another positive sign," James Parrott, chief economist at New York-based Fiscal Policy Institute, said in a phone interview.

Goldman Sachs liked the current view of the U.S. economic recovery enough to project an acceleration of growth from the current 2.25% pace, to be as much as 3.5% next year. That's a serious bump. Nonetheless, Goldman analyst Jan Hatzius, in a report published Friday, cautioned that higher growth rates won't necessarily translate into more jobs.

That's a theme we've heard throughout this slow recovery, as equities have surged in line with higher profits while non-financial U.S. corporations sit on approximately $1.48 trillion in cash, Moody's reported following a review of the more than 1,000 companies it rates as of June 30. 

Yet the variety of the jobs added in November marks a change from recent monthly increased which were heavily concentrated in lower-paying service sectors. November's jobs gains in retail, trade and food services actually rose at a slower pace last month than the monthly average over the past year, Parrott points out. 

Instead, job growth could be found in transportation and warehousing, manufacturing and professional business services and construction all of which compensated for slight declines in financial services and information technology. Manufacturing jobs have been increasing for three months, an encouraging trend.

The job numbers are even more impressive given the October shutdown of the federal government, a hit to business confidence that prevented thousands of people from being paid and services from being maintained. Importantly, average weekly earnings grew 2.3% in November, slightly faster than consumer inflation though hardly a catalyst to compensate for the larger and more troubling national trend of income inequality.

"Apparently, the shutdown didn't hurt so much that it offset the positive movements in the economy," Parrot said. 

To quicken the pace of the recovery, Parrott suggests that Congress agree to do no harm. Though he recognizes this Congress isn't about to follow his prescription for a return to 2009 government spending as stimulus, Parrott says the country's recovery from the Great Recession might benefit from a peace agreement over the federal budget coupled with a commitment to avoid another round of sequestration.

"If we obtain within reach solutions on the budget that could certainly help shore up both business and consumer confidence," he said. "There's enough underlying momentum in the economy if Washington doesn't send negative signals that could help reinforce the positives from the November jobs report."

Heading into the holiday season, we should all be so lucky.

--Written by Leon Lazaroff in New York.

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs