December 1, 2013
LIA's Monthly Economic Report: Job Growth and Strong Gains
By: Dr. John A. Rizzo
The US economy fared well in the face of the Federal Government shutdown. Jobs growth was much better than expected and retail sales and home prices showed strong gains. The stock market continued to climb, as the Dow Jones passed the 16,000 mark for the first time. Inflation remains quite low, suggesting that the Fed may continue its pro stimulus policies.
At the same time, the benefits of the recovery have varied considerably across different sociodemographic and economic groups. The unemployment rate is much lower among persons with college degrees than among those lacking a high school diploma. Minorities and teenagers have much higher unemployment rates than do adult Caucasians. Labor force participation is at a 35 year low and the unemployment rate remains elevated at 7.3%. Thus, there remains much room for improvement.
Some 204,000 jobs were added on October 2013, greatly exceeding expected growth of just 125,000 jobs. Employment rose in retail trade, manufacturing, leisure and hospitality, professional and technical services, and health care. Applications for unemployment benefits, a proxy measure for layoffs, fell in the first week of November to a seasonally adjusted 339,000. This was the fifth straight week of decline in these applications. Applications for unemployment benefits are now near pre-recession levels, further evidence of a labor market in recovery. There were 11.3 million unemployed persons in October 2013, a figure that also changed little from the preceding month.
Despite these gains, the unemployment rate ticked upward slightly in October to 7.3%, as Federal Government workers furloughed by the shutdown were counted among the unemployed. Moreover, the labor force participation rate is at its lowest level in 35 years. The unemployment rate varied widely by educational attainment, at nearly 11% last month for persons lacking a high school diploma, but just 4% for college graduates. There was also considerable variation in unemployment rates across sociodemographic groups:
Adult males 7.0%
Adult females 6.4%
African Americans 13.1%
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