Friday, January 6, 2012

200,000 and 8.5%

The Lehmann Letter (SM)

This morning's Bureau of Labor Statistics report on December employment began with great news. The unemployment rate fell to 8.5% and the economy created 200,000 new jobs:

Some details in the report were especially pleasing. The private sector created 212,000 jobs and construction employment increased for the first time in months. Government, unfortunately, continued to shed workers. This is an unfortunate irony of current conditions. Government usually adds workers during slack times as a matter of policy priority. The current political climate has prevented that.

Job Growth

(Click on chart to enlarge)

(Recessions shaded)

The chart shows that monthly job growth of 200,000 or more is typical for a robust economy. See the years 1995 to 2000 and 2004 to 2007 for an example. Employment gains of this magnitude must become the rule rather than the exception for the unemployment rate to fall to an acceptably low level of 5% or less.

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© 2012 Michael B. Lehmann

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