TOPICS > Politics

Last Jobs Report of 2012 Shows Slow Growth, Looming Economic Uncertainty

January 4, 2013 at 12:00 AM EST
The December jobs report showed positive but slow growth, while worries of imminent recession were calmed by the passage of a deal to avert the "fiscal cliff." Is the economy moving in a positive direction? Jeffrey Brown talks to public media journalists about economic concerns for the coming months.
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JEFFREY BROWN: 2012 ended with another month of steady, but unspectacular job growth. That was the main takeaway from today’s numbers out of the Labor Department.

The weeks of will they or won’t they go over the fiscal cliff in Washington had raised fears that businesses would cut back hiring. Instead, the December jobs report suggests that neither employers nor job seekers were rattled, but that there had also been no big pickup in job growth. The U.S. economy added 155,000 jobs, slightly down from November, but in line with analyst expectations.

Overall, an average of 153,000 jobs were added each month in 2012, roughly the same pace as the year before. And in a sign of growing confidence, more people entered the job market last month.

JEFF MACKE, Yahoo! Finance: One hundred and eighty-two thousand Americans got into the labor force. That means that they went out there looking for jobs. That means people are getting more optimistic out in the streets.

JEFFREY BROWN: One area where that optimism was justified is construction. It added 30,000 jobs, the best performance in 15 months. Much of that was due to reconstruction from Hurricane Sandy.

Other bright spots were health care, which added another 55,000 workers, restaurants and bars, which gained 38,000 more employees, and manufacturing, with 25,000 new positions.

Alan Krueger is chairman of the president’s Council of Economic Advisers.

ALAN KRUEGER, White House Council of Economic Advisers: I think we’re seeing the job market is continuing to heal. The economy’s continuing to heal from the very deep damage that was caused by the financial crisis.

JEFFREY BROWN: Even so, there were also indications of continued sluggishness in December. The unemployment rate was 7.8 percent. That’s up a 10th from the initial reading in November, which was revised upward today. And the number of unemployed rose 164,000 to 12.2 million.

That number rises to nearly 23 million once part-time workers and those who’ve given up looking for work are added in. Most economists expect modest growth, but little overall improvement this year, as the pace of job growth remains too low to make much of a dent in the unemployment rate.

And we get an economic snapshot of different regions of the country from three public broadcasting reporters. Erik Anderson is a business reporter and anchor on KPBS in San Diego, Calif. Cathy Lewis is an anchor and host of her own show, “HearSay” on WHRO in Norfolk, Va. And Stan Jastrzebski is news director for WFIU in Bloomington, Ind.

Well, Erik Anderson, let’s start out West with you. Do the new numbers jibe with what you are seeing in your area and in California, steady but not spectacular hiring?

ERIK ANDERSON, KPBS Public Radio: That’s exactly right.

California has been tracking in that steady way. We have been seeing growth for now probably the past 18 months or so. But it hasn’t been that spectacular growth. It’s not that recovery growth. A lot of economists here are talking about how the economy is showing good, healthy signs and the job market is reflecting that. But it’s not showing the kind of signs you need for the economy to recover completely.

So we’re not quite at a complete recovery, but certainly the job market is picking up here.

JEFFREY BROWN: Any particular sectors that you would look at or point to?

ERIK ANDERSON: Yes, there are a couple out here, in fact.

Leisure and hospitality industry gained significantly, about 62,000 jobs there. Construction picked up here, not because of Hurricane Sandy on the West Coast. That’s mostly I think due to the optimism in the business arena and the rebound in some of the housing market. And also the information industry has picked up about 26,000 jobs here.

JEFFREY BROWN: Stan Jastrzebski in Bloomington, what do you see in your area?

STAN JASTRZEBSKI, WFIU: Well, I think in Bloomington and Indiana generally, what we may be seeing is sort of a delayed reaction.

I have talked to some economists who say that maybe business owners were a little late to pick up on, for instance, how bad the fiscal cliff could be for them.

And so there’s a little bit of worry, I think, still here. And the state is kind of now getting to the point where people are beginning to figure out what the fiscal cliff negotiations meant for them.

And so the state’s manufacturing sector, for instance, had been growing at three times the national rate. And now I guess we will kind of watch and see where it goes going forward, especially in such a manufacturing-heavy state as this.

JEFFREY BROWN: Well, so how has that affected manufacturing and other sectors? Or you are saying it is more of a wait-and-see at this moment?

STAN JASTRZEBSKI: That’s exactly right. Wait and see is probably a very good way to put it.

The slowdown has been felt here in Indiana and as in California. It’s been slow and steady. But now here in Indiana, we need to see going into the first couple of months of 2013 where the numbers go from here. I think this is kind of potentially a little bit of a tipping point. And could we — if we continue on in the way we have been going, then I think we will have gotten past the worries of the cliff, but I think that is still a little too soon to tell.

JEFFREY BROWN: Cathy Lewis, we have talked to you in the past, a really military area in Norfolk. But give us a sense of overview of what you are seeing.

CATHY LEWIS, WHRO: Sure.

Well, while Stan suggests that there is a little worry in Indiana, I can tell you there is a lot of worry here. That is especially true because the Hampton Roads region has rested comfortably between the state’s unemployment rate and the national unemployment rate. But that could change pretty quickly here as a result of the delay of sequestration now to March 27.

In fact, just today one of the state’s leading economists, Christine Chmura, told the Virginia Chamber of Commerce that the state will definitely move into recession if sequestration occurs on March 27 and that that will particularly be felt in the Northern Virginia region, the Washington suburbs, and right here in Hampton Roads, which has the largest military concentration in the country.

JEFFREY BROWN: Well, Cathy, give us a little bit more of the other industries. I don’t know if you can set aside all this sequestration and uncertainty over that. But where had things been headed in the past couple of months?

CATHY LEWIS: I think things had been holding pretty steady in the region.

This particular conversation about the degree of dependence this community has on defense has really brought into — has been brought into sharp relief in these last couple of months.

And I think there is a growing sense of awareness on the leaders here in this region. That the fact that one of every two dollars in the economy comes from defense is a challenging place to be on the brink of what may happen on March 27.

I talked with a CEO that today who told me that the fact of the matter is they are at what they are calling a nervous parade rest. There’s very great concern because, as the year moves on, if the fiscal — if the sequestration comes through, there will be a shorter period of time, and so the cuts will be bigger and more painful.

JEFFREY BROWN: Erik Anderson in San Diego, what does your — I mean, we hear so much about this uncertainty of the economy and then uncertainty based on what is going on here in Washington.

What is your sense of how that plays out in the economy there?

ERIK ANDERSON: Well, just like in Virginia, there is a keen awareness about the uncertainty over federal funding here.

 

Sequestration hits the active-duty military personnel that are stationed in San Diego, big naval installations here, Marine installations. It hits the defense contractors that are centered here in San Diego.

A lot of research and development goes on in this area and in the Los Angeles area. And it also hits the researchers who are working in life sciences who rely on federal funding for their research dollars as well.

So there’s a lot of concern because it reaches a lot of areas that really buoyed the area up during the economic downturn, that kept that economic downturn from being as severe, which was the military and life sciences.

JEFFREY BROWN: So, your sense is people were watching carefully the fiscal cliff doings, and even more so now. We have been talking about on the program that this is going to continue for months.

ERIK ANDERSON: Yes, they’re — it’s really kind of seen as more of a swerve, instead of careening over this fiscal cliff.

People realize that, you know, that the vehicle is still moving, and there is still the potential to have a serious impact in jobs and in dollars that come in and out of the San Diego economy. And so that has them worried as well.

JEFFREY BROWN: Stan Jastrzebski, I wonder, also thinking about what is going on in Washington, and that would be the Federal Reserve, which has kept interest rates at close to zero for quite a long time now.

Can you tell whether that’s having some impact in terms of businesses willing to invest or consumers willing to borrow?

STAN JASTRZEBSKI: I think one of the consumer markets might be the housing sector, which has been particularly positive in Indianapolis and in Indiana in general.

New housing starts for all of 2012 were up in Indiana. So people seem to be ready to take out those loans, ready to get new houses built.

But now we’re hearing from mayors around the state who say that there is the opposite problem, where, even though the state’s got a $2 billion surplus, we’re looking at assessed values of homes going down.

And so the consumers who are buying the houses that are new are not the same, obviously, as the people who have the homes and are seeing those home values go down. And, as those home values go down, of course so does property tax revenue.

And so you have kind of a two-sided argument here. People are willing to invest themselves, but, when they invest, they’re worried, I think, that their investment is going to potentially lose value over time more quickly than it might otherwise.

JEFFREY BROWN: Cathy Lewis, what about that, the interest rates and the housing sector in particular?

CATHY LEWIS: You know, it’s an interesting time here, because the prices are starting to come up a little bit. We are starting to see some more sales activity.

But you have a lot of people who are sort of stuck for the moment. Their houses are — they owe more than their houses are worth. This frequently happens with military families who have been transferred out of the area. So you have a lot of folks who have been in that situation, who are renting homes and can’t afford necessarily to buy somewhere else.

But things are moving. And the real estate community is saying the prices are starting to come up, and they’re feeling more optimistic.

JEFFREY BROWN: Well, since we’re at the beginning of the year, Cathy, let me just ask you what — first — what are you looking for? I mean, what is — it sounds as though the most important things for your area is what happens here in Washington.

CATHY LEWIS: Boy, is there no question about that. All eyes are on March 27. I have to be honest and say I’m not hearing much enthusiasm about the prospects of coming up with a deal that will do away with the sequestration. There’s great concern about that, because if managers are required to find this-year dollars, about the only place they can do that is personnel and maintenance contracts, service contracts, that sort of thing.

So that means you’re going to have — be hitting buildings and grounds folks, personnel. They’re the very real prospect of furloughs and layoffs. You might have less steaming time, less aircraft hours. So there are a lot of small and midsized contractors that serve the defense industry who are very, very anxious.

And I’m talking to folks who are saying they’re anxious because the federal folks who are usually buying their services are sitting on the fence for the moment and won’t do anything until after March 27.

JEFFREY BROWN: And, Erik Anderson, just a brief last word from you. What are you look — what are you most focused on for 2013?

ERIK ANDERSON: Well, if you take the sequestration out of the equation and you look just at the economy as it is now, I think what economists here are saying is most hopeful is the rebounding of the housing industry out here.

They’re starting to see some activity in terms of prices. The shadow inventory of distressed housing has shrunken quite a bit. There are still a lot of people who are underwater on their mortgages. But, overall, the supply is tight. There’s buyer interest, and there’s hope that it will become an engine again for the region.

JEFFREY BROWN: All right, Erik Anderson, Stan Jastrzebski and Cathy Lewis, thank you, all three.

CATHY LEWIS: Thank you.

STAN JASTRZEBSKI: Thank you.

JUDY WOODRUFF: Online, find our monthly unemployment calculations on our Making Sense page, where we also look back at a year of labor data.