An Unemployment Report With A Lot Of Year-End Noise

I think there was too much anticipation built into yesterday's unemployment report. I, like a lot of people, thought that the report might be better than what was finally reported. I based this on the fact that companies try to avoid layoffs during the holidays and because there is a logical limit to the number of employees they can let go and still remain operational.

As it was, the report stunned many. There was a high expectation that December might actually add jobs. But, as we know now, the economy dropped another 85,000 workers. Even the government shed 21,000.

The only thing that the Democrats and Obama can cheer about is the fact that November's jobs report was revised to show that 4,000 jobs were added; rather than a loss of 11,000. But, in an estimated workforce of 140 million, 4 thousand jobs is nothing.

I think the jobs reports going forward are now more important than ever. Having spent years in the business arena, I know that January through March are important months. It is a time when companies assess their business activity over the last 12 months and make decisions on their operations going forward. If they had a good year, they probably won't make any cuts in either operations or people. However, I believe many will have seen the last year as a negative and will, then, decide to make changes that could result in more lost jobs for the months of February, March, and April. By the way, part of the decision to keep or let people go could be based on any increases in the tax burden that companies see coming out of Washington and state governments for this year and beyond.

At the very least, next month's jobs report should show more losses than the 85,000 that we saw this month. That's because a number of seasonally added jobs will be shed as the retail Holiday sales activity shuts down. Additionally, I would think that companies who postponed layoffs because of the Holidays will finally be letting some people go.

All of this means that we will have high unemployment rates for a very long time. Don't forget that our economy already has an unemployed and under-employed level of about 23 million workers. Under normal conditions that number should be at about 10 million. This means that 13 million valid jobs must be created to come back to normal. If that is to happen in 3 years, the economy would have to add more than 275,000 jobs per month. Losing any jobs is just going to sustain the currently high unemployment level.