Center for American Progress

Economic Situation Still Fragile Despite Lower Unemployment

Economic Situation Still Fragile Despite Lower Unemployment

The fragile economic situation seen in December’s employment data release indicates yet again that the economy needs consistent, continued support for job creation to secure recovery.

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The economy added 103,000 jobs in December, which continues a positive trend of employment growth. But a closer look at the numbers reveals that hopes of an accelerating job market recovery are once again disappointed. The slow and volatile pace of employment growth in recent months should be a warning sign to policymakers that a still-fragile recovery needs consistent policies targeted at jobs, jobs, and more jobs. As a new, more conservative Congress assumes the reins of government, Americans need to know that cutting the government’s budget and failing to make investments for recovery and long-run growth will only make our economic problems worse.

Overall employment gains were insufficient to even keep pace with job demands from population growth. And these gains were concentrated in low-wage, low-productivity industries, further aggravating job seekers. Unemployment has stood at or above 9 percent for a record 20 months now, which is the longest spell since the Department of Labor began reporting this statistic in 1948. The labor market is not out of the woods yet, either. Private forecasts predict unemployment to stay above 9 percent at least through 2011.

December’s unemployment rate dropped from 9.8 percent to 9.4 percent, but the change highlights the frustrations of job seekers more than substantial employment gains. The number of people counted as unemployed fell by 556,000. Presumably, many have given up looking for work in an environment where there are nearly five people for every job opening. An estimated 260,000 people left the labor force altogether and the number of people re-entering the labor force with new hopes of finding work fell by 19,000 in December.

The number of people unemployed and looking for work for more than six months grew by 113,000 last month. In total, more than 6.4 million people are long-term unemployed—44.3 percent of all unemployed people searching for work, and 300,000 more people than a year earlier. The typical unemployed worker in December had been out of a job and searching for work for 22.4 weeks—a full two weeks longer duration than one year ago.

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