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Pathetic December Job Numbers Proof 2014 to Be Challenging Year

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100114_PC_lombardiWhat happened?

The Bureau of Labor Statistics (BLS) reported this morning that only 74,000 jobs were added to the U.S. economy in December. Most economists were expecting 200,000 jobs to be created in December—way off reality. The December increase in U.S. payrolls was the slowest pace in almost three years.

But it gets worse…

The underemployment rate, which I consider the “real” measure of the jobs market in the U.S. economy, was unchanged in December at 13.1%. The underemployment rate includes those people who have given up looking for work and those people who have part-time jobs but want full-time jobs.

The table below shows the official unemployment rate versus the underemployment rate for 2013.

U.S. Official Unemployment Rate vs. Underemployment
Rate, January-December 2013

Month Revised Official Unemployment Rate (U3) Underemployment Rate (U6)
January 7.90% 14.40%
February 7.70% 14.30%
March 7.50% 13.80%
April 7.50% 13.90%
May 7.50% 13.80%
June 7.50% 14.30%
July 7.30% 14.00%
August 7.20% 13.60%
September 7.20% 13.60%
October 7.20% 13.70%
November 7.00% 13.10%
December 6.70% 13.10%
 
% Change Jan.-Dec. -15.19% -9.03%

Data source: Federal Reserve Bank of St. Louis web site,
last accessed January 10, 2014.

What the above chart shows is that despite what we heard about the U.S. economy improving in 2013 and despite the Federal Reserve creating over $1.0 trillion in new money in 2013 to help the economy, the “real” unemployment rate declined by less than 10% in 2013, from 14.4% at the beginning of the year to 13.1% by the end of the year. The number of unemployed people in the U.S. stands at a still-staggering 10.4 million.

Of the 74,000 new jobs created in December in the U.S. economy, 55,000 jobs were in the low-paying retail trade. Despite what they tell us about the housing market rebound, construction jobs in the U.S. economy declined by 16,000 in December.

I have been warning my readers with the same message for months: I’m very suspicious of this economic recovery. If we take out the rising stock market, there would be no recovery for the U.S. economy. The Federal Reserve has kept interest rates artificially low for five years and printed trillions of dollars in new money, and the U.S. economy is still on life support. 2014 will be a very difficult year for the economy and the stock market.

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About the Author, Browse Michael Lombardi's Articles

Michael Lombardi founded investor research firm Lombardi Publishing Corporation in 1986. Michael is also the founder and editor-in-chief of the popular daily e-letter, Profit Confidential, where readers get the benefit of Michael’s years of experience with the stock market, real estate, economic forecasting, precious metals, and various businesses. Michael believes in successful stock picking as an important wealth accumulation tool. Michael has authored more than thousands of articles on investment and money management and is the author of several successful... Read Full Bio »

  • robert corbett

    Soft job creation will be an excuse to postpone any additional tapering money creation is the order of the day despite its failure to impact mainstreet or the labor participation rate. Once the FED gets a stupid idea they will continue to run with it until faced with another full blown crises.

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