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bjbjLULU JEFFREY BROWN: The U.S. economy added more than 200,000 jobs last month, beating
expectations and raising hopes that a stronger recovery might be under way. Spurred by a
surge in hiring in December, the nation ended 2011 with a jobs report that had the best
numbers seen in some time, among them, the unemployment rate down to 8.5 percent, the
lowest in nearly three years, and falling for the fourth consecutive month. The economy
has now added 100,000 jobs or more for each of the last six months. That hasn't happened
since April 2006. And the drop in the jobless rate came from new hires, not discouraged
workers giving up the job hunt. For President Obama, it was welcome relief. He spoke today
at the Consumer Financial Protection Bureau. PRESIDENT BARACK OBAMA: After losing more
than eight million jobs in the recession, obviously we have a lot more work to do. But
it is important for the American people to recognize that we've now added 3.2 million
new private sector jobs over the last 22 months -- nearly two million jobs last year alone.
JEFFREY BROWN: Republican House Speaker John Boehner released a statement calling it good
news, but, he noted, "Today marks the 35th consecutive month of unemployment above 8
percent, and too many Americans continue to struggle to find their next job." The president
also today called on Congress to extend the payroll tax cut for the rest of 2012 to help
the recovery maintain momentum by bolstering spending and putting some of the 13 million
Americans who remain unemployed back to work. And some parsing of the numbers now from Diane
Swonk, senior managing director and chief economist for Mesirow Financial, a diversified
financial services firm based in Chicago, and Mark Vitner, managing director and senior
economist with Wells Fargo, where he tracks U.S. and regional economic trends. Diane Swonk,
let's start with -- focus on the positive signs in today's report. This was better than
expected. Where was the hiring coming from? DIANE SWONK, Mesirow Financial Holdings, Inc.:
Well, we saw broad gains in a lot of different places. Some of the biggest gains were in
things like transportation. It wasn't just those free shipping that we saw out there.
We actually saw a lot of couriers and messengers being used by corporate America that were
loosening their coffers on those -- all that cash they have on their balance sheets. We
also saw a lot of hiring in the food and hotel industry, the entertainment industry -- again,
corporations returning to all of that kind of holiday spending they once did, entertaining
their clients and their workers. So those people who are working got a few more holiday
parties this holiday season. JEFFREY BROWN: And so, Mark Vitner, what else did you see
that was positive? What about the quality of these kinds of jobs? MARK VITNER, Wells
Fargo: Well, the quality of jobs has improved. And it's improved a little bit, and it needed
to, because in the previous four or five months, we really saw a lot of jobs being added in
low-paying industries. And there was still some of that in this report, but the overall
number was better. And we saw broader job gains. We saw gains in manufacturing. We added
23,000 jobs there. And a lot of those jobs that were added in manufacturing were in higher-skilled
industries like industrial machinery, motor vehicles, computers, and electronics, so relatively
high-paying jobs. And that should bolster the income numbers. And that's really one
of the more vulnerable points that we have in the economy right now, because we haven't
had a whole lot of income growth over the last year. JEFFREY BROWN: Well, does it -- Diane
Swonk, does it begin to look as though companies have a new attitude, a jumping in or at least
dipping a foot into the water in terms of new hires? DIANE SWONK: I think it's more
of a pinkie toe in the waters of new hires. JEFFREY BROWN: Pinkie toe, okay. DIANE SWONK:
Yes. (LAUGHTER) DIANE SWONK: We are seeing the trend in the right direction. That's the
good news. We are also seeing a lot of what looks to be new business formation. That's
new companies starting out there. And that really was the backbone of hiring in the 1990s.
So we want to see that. And I agree with Mark. You really need to see a lot more solid wage
gains. One month does not a trend make. And this has been a real turnaround in this particular
month of finally seeing the composition of jobs a little better and a little stronger
for wages out there, because we had been seeing in previous months when we were seeing the
job gains not very high-quality jobs, and a lot of people anecdotally reporting they
were trading down. In order to get a job, they were accepting a job at a lower pay just
to be able to make ends meet. JEFFREY BROWN: Well, you do, Mark Vitner, have now -- over
a series of months, you see regular gains now. So, of course, the key question is are
we at some kind of turning point or potentially there? MARK VITNER: I'm not so sure that I
would call it a turning point. There are a lot of things at play here. One of them has
to do with the seasonal adjustment process, which has probably biased the numbers in the
better direction, both the employment numbers and the unemployment rate to the downside.
And I don't think it's a coincidence that the unemployment rate has fallen in each of
the last four months. Those happened to be the worst four months for the economy following
the onset of the financial crisis. And that's really biased the seasonals down. And I think
that what we are likely to see is a little bit of carryover into 2012, but a little bit
of a payback in the spring. And we may see the unemployment rate rise a bit. Another
thing that may happen is, as more and more people hear that the unemployment rate has
come down and the employment numbers are looking a little better, some of the folks who dropped
out of the labor force may come back in. And that may actually push the unemployment rate
back up a bit. So we're not out of the woods and we may see another bump in the road, but
this is clearly a step in the right direction. JEFFREY BROWN: Well, expand on that, Diane
Swonk, in terms of the people who are out looking now. I was wondering how the psychology
works. Does confidence begin to build in for companies and workers themselves, or does,
as Mark just said, it can also raise the unemployment rate at the same time, right? DIANE SWONK:
Well, actually that's what we would see first, is you tend to see more people come into the
working force and come back and try to look for jobs and the unemployment rate rise, which
is actually not a bad thing if it's because they have got hope that they can actually
get a job and then they eventually do get it. You want it to rise and then fall again.
And I agree with Mark on that. We are still looking at a very uneven recovery. And I do
think there is going to be some payback. Some of the gains we saw are somewhat suspect.
I agree with Mark on that. Construction gains, it was 60 degrees here today in Chicago, almost
60, and it's just -- it's not usual for January. It's been usually warm in large parts of the
country. And that helps some of those construction numbers that we saw positive off of a very
low base. We know construction is clearly not a boom industry right now. So this is
still a very uneven recovery. And really, until housing comes back, you're not going
to see a more robust recovery in the U.S. economy. And, as Mark said, there is going
to be some payback. We got a lot of headwinds out there that we still have to deal with,
political uncertainty in Europe, a recession in Europe, also our own U.S. -- certainly,
political gridlock is not helping the U.S. economy or confidence, for that matter. JEFFREY
BROWN: It is of course -- Mark Vitner, we have sort of been here before in a way. Just
I think a year ago things were looking up a little bit, and then they went back south
again. MARK VITNER: Yes, and the year before that, we went through that as well. We were
worried about a double dip in 2010 and also in 2011. DIANE SWONK: Deja vu all over again,
yes. MARK VITNER: And I don't know that we're going to be there again in 2012. But when
you look at the obstacles that are out there -- and Diane highlighted two of them, but
there is one other one, which is Iran. And one of the things that really, I guess, upset
the apple cart last year was that spike in gasoline prices that followed the onset of
the Arab spring. And then we had the Japanese earthquake, which was not totally unforeseen.
So we don't -- we know there are a lot of potential stumbling blocks in front of us
and who knows what else is out there. So, when you ask that question about, is this
a turn, I think it's a step in the right direction, but I don't think it's the start of an acceleration
in overall job growth. If you take into account all of the special factors in the employment
data, you're left with a number somewhere around 115,000 net new jobs, which is about
the same number that were added in October and November. And I think that's probably
where we will be when we get the January numbers a month from now, maybe a tad better than
that, but somewhere in that ballpark. JEFFREY BROWN: Diane, can just give us a brief glass-half-full
version of this, since there hasn't been a lot of good news for a long time? So today's
numbers look better than before. DIANE SWONK: The trend is in the right direction, but I
agree with Mark. You know, we saw a bit of a catchup in the fourth quarter. There will
be some giveback to that. I don't think we're in for a double-dip recession as long as Europe
cannot go into a financial crisis. That is the good news, and the good news is it looks
like the recovery is getting a little more resilient in the labor market. But this is
far from a boom. And it is particularly hard for those with -- that are long-term unemployed
to get reemployed. We're seeing a lot of people who are quitting their jobs now and getting
new jobs. That is good news. That means there are some opportunities out there that weren't
there before. But it's still a little bit soon to say pop the champagne corks and, you
know, the recovery is finally here. JEFFREY BROWN: All right, Diane Swonk, Mark Vitner,
thanks, both, very much. MARK VITNER: Thank you. h3^V h3^V urn:schemas-microsoft-com:office:smarttags
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