The American economy added 74,000 new jobs in December, but about 90,000 of those jobs were needed just to keep up with population growth, so net job growth clocked in at minus 16,000. There’s no way to sugarcoat this: it’s pretty dismal news. Last night was obviously a bad time to predict that the economy might be getting back on track.
The headline unemployment rate dropped to 6.7 percent, but that’s mainly because a huge number of people dropped out of the labor force, causing the labor force participation rate to decline from 63.0 percent to 62.8 percent. At the same time, the number of discouraged workers dropped. This suggests that in addition to the usual exodus of workers due to retirement, a fair number of people simply gave up and quit looking for work, dropping out of the official numbers entirely.
It’s only one month, and it might not mean much. Maybe it was just bad weather. Maybe. But it’s a lousy start to the year.