February 4, 2014
LIA Economic Report: February, 2014
By: Dr. John A. Rizzo
The US economy showed some mixed results in December 2013. While there was evidence of weakness in the labor market, this may be attributed to severe weather effects. Housing sales were relatively weak in December as well, although strong for the year as a whole. But for the year overall, GDP grew at a healthy pace of 3.2 percent, and at an even more robust rate of 3.7 percent in the last half of 2013. Consumer spending and confidence remain strong, and inflation remains low, all of which bodes well for the economy. Despite some disappointing economic news in December, the overall picture looks favorable for continued growth.
The National Economy
The U.S. Labor Market
Just 74,000 jobs were added in December 2013 according to the US Labor Department, far below expectations. Retailers had the highest jobs growth, adding 55,000 workers. Professional and business services added 19,000 and manufacturers, 9,000. Although the unemployment rate declined to 6.7 percent, this largely reflected some 347,000 people leaving the labor force. Both cold weather and a statistical aberration in the Labor Department''s survey have been blamed for the weak jobs report. So this result may be just a one-month phenomenon rather than a long-term effect. Moreover, a survey by payroll processor ADP indicates that the private sector added 238,000 jobs in December, the most in 13 months. Some discrepancy is to be expected between the government and ADP jobs reports, as the ADP survey includes only private business and the samples of private sector employers surveyed differs as well. But during the past 12 months, the average discrepancy between the ADP and government jobs numbers has been about 43,000. This latest divergence far exceeds that.
Jobless claims have remained at a level consistent with moderate jobs growth, although the most recent report showed a higher than expected increase to 348,000 claims. Weekly hours worked and hourly earnings changed little in December from the preceding month.
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