Each month, Economics Professor Thomas "Danny" Boston appears on CNN to break down the new Labor Department job numbers. He says the unemployment rate stayed the same in December (7.8 percent) thanks to the action/inaction of Washington DC.
The economy is on a treadmill when it comes to job creation, largely because of the endless wrangling over the fiscal cliff. As a result, the unemployment rate, which declined significantly over the last few months, stalled in December at 7.8% -- unchanged from November
While 155,000 new jobs were created (an amount that was predicted) it was not sufficient to reduce the unemployment rate further. That is, more jobs are needed to provide employment opportunities for new entrants into the labor market and those displaced by the recession.
The brightest spot in the jobs report was the creation of 55,000 manufacturing and construction jobs last month; industries that have lagged severely during the recovery. On the down side, Black unemployment increased significantly from 13.2% to 14.0%
For an economy that grew by 3.1% last quarter, the latest results suggest clearly that Washington politics is interfering with economic growth. In particular, businesses investment has stalled and consumer confidence is declining rapidly.
Finally, the amount of panic over hitting the fiscal cliff was unwarranted, given the growth rate of the economy. While putting off big decisions two months down the road, the hasty decision has also complicated the path forward by removing tax increases from the table.
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