Economic Outlook: Job data that can't win

By ANTHONY HALL, United Press International  |  Dec. 27, 2012 at 10:20 AM
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First-time jobless claims fell to 350,000 in the week ending Saturday, a drop of 12,000 from the previous week, and potentially part of a healthy trend.

The figure is flirting with a 4 1/2-year low for the weekly statistic and a far cry from the tail-spinning days of January through May 2009 when initial claims tallied more than 600,000 for 18 weeks in a row.

In recent months jobless claims have been on a fairly steady path lower. Except for the backsliding wallop provided by Hurricane Sandy, the statistic is beginning to look almost healthy.

The sluggish recovery, however, is not making a serious dent in the unemployment crisis, despite the dropping unemployment rate, which started the year at 8.5 percent and is likely to end the year in the vicinity of 7.7 percent, where it is now.

The jobless rate is a much maligned statistic with good reason, all the more tragic given it is one of the three most recognized economic statistics along with the gross domestic produce and the consumer price index.

Of course, its foibles are well known. The unemployment rate does not include people who have stopped looking for work and in recent months this group has made up the lion's share of the reason the rate has been dropping.

What that means is that in 2013 the jobless rate can only make healthy headway with one remarkable and unlikely set of circumstances while it can go backward for two very likely-to-occur reasons.

On paper, the unemployment rate can improve if the economy begins to add more jobs each month than the number of persons who enter the workforce, including college graduates and, for that matter, dropouts or those choosing to skip college. To move the rate lower in a healthy fashion, economists expect growth in the range of 300,000 jobs per month or more. For 2012, the average number of new jobs per month has been 151,000, about half as many as required.

Will economic growth double in speed in 2013? The economy in Europe is in recession and the economies of Asia are slowing down. Will the United States carve a new domestic, buy-American economy out of the current global imbalance and take off on its own? Highly unlikely.

There are two ways the unemployment rate can slip, however. One is for the economy to improve slightly. If that occurs, millions of workers who have given up looking for work and those working part time but preferring full time, or those in jobs they have been stuck in during a sluggish recovery will start looking for work again. That means a slight and even modest improvement will push the unemployment rate higher.

The economy could also do worse. With lawmakers in Washington unable to agree on a fiscal cliff avoiding budget, there's a chance the economy could do worse, setting the unemployment rate back for the legitimate reasons that layoffs come thick and fast again.

Jobs added per month is a much cleaner statistic than the unemployment rate and the clearest statistic would be the ratio between jobs added and the number of persons of working age, minus, perhaps, those with disabilities that prevent them from working.

Likely as not, the headline statistic, which is easily exploited for political gain, is not going to make anyone proud in 2013.

In international markets the Nikkei 225 index in Japan gained 0.91 percent while the Shanghai composite index in China lost 0.6 percent. The Hang Seng index in Hong Kong gained 0.35 percent while the Sensex in India slipped 0.48 percent.

The S&P/ASX 200 in Australia rose 0.28 percent.

In midday trading in Europe, the FTSE 100 index in Britain gained 0.29 percent while the DAX 30 in Germany climbed 0.38 percent. The CAC 40 in France added 0.77 percent while the Stoxx Europe 600 gained 0.22 percent.

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