Minnesota will release December’s jobless rate Jan. 21, but State Economist Tom Stinson isn’t expecting a big drop. Last month, these men at the Minnesota Workforce Center looked for work.

David Joles, Star Tribune

All eyes on national job-growth numbers

  • Article by: DEE DePASS
  • Star Tribune
  • January 7, 2010 - 7:48 PM

Did the nation add jobs in December for the first time in two years?

Hopes are high that it may have, with the Labor Department to answer that question Friday morning.

It would be the first welcome news for millions of weary job seekers slogging through recession. While layoffs nationwide have slowed in the past six months, job growth remains elusive, prompting economists to warn of a long, painful recovery.

Heidi Shierholz, a labor market economist with the Economic Policy Institute (EPI), noted Wednesday that the recession is now two years old. "And the big question is, will this be the 24th straight month of job losses or will we add jobs for the first time since the start of this whole thing?" Shierholz said.

"If you look at the trend of the employment changes over the last few months, you see a very steady improvement. If you follow that trend, we should probably have added jobs in December, and that might happen."

However, she noted that December's initial jobless claims were very high -- about 450,000 new claims a week. As a result, the consensus estimate among economists is for a loss of about 23,000 jobs for the month. That would still be a big drop from 300,000 job losses in July and 150,000 in August, but up slightly from the 11,000 cuts in November, Shierholz said.

EPI President Lawrence Mishel noted that even small job gains would give a psychological boost to consumers and job seekers but would pack little punch for the economy.

"The difference between 25,000 positive and 25,000 negative [jobs] won't matter a great deal," Mishel said. "You need to be creating 125,000 a month just to absorb the new labor force."

State to release figures Jan. 21

Minnesota State Economist Tom Stinson said most forecasts still predict U.S. unemployment near 10 percent for much of 2010. He expects Minnesota's jobless rate will hover near 8 percent. It was 7.4 percent in November but is expected to rise as more discouraged workers look for work again.

The state will release December figures Jan. 21, but Stinson isn't expecting a big dip because "we are not likely to have had as much seasonal hiring as we have had historically" for the Christmas season, he said. "We will have little bit weaker performance on the jobs front nationally and in Minnesota in December than we had in November. But things may perk up a little bit and be a little bit stronger in January" because there won't be as many holiday workers to lay off.

November's national jobless rate fell slightly to 10 percent. Mishel expects it to rise to 10.5 percent by next fall, but drop to about 9.7 percent by December, provided Congress and President Obama enact a jobs stimulus bill that focuses on job growth. Proposals call for more infrastructure spending, aid to local and state governments, small business tax cuts and more.

Progress being seen

Even so, it will likely take five years before employment levels are back to pre-recession levels, Mishel said, noting the "savage cost reductions" most companies have employed to generate profits in 2008 and 2009.

Still, new progress is being seen weekly. In a report Wednesday, global outplacement firm Challenger Gray Christmas Inc. said that after a seven-year high, monthly job-cut announcements from its U.S. clients fell for a fifth consecutive month in December, falling "to their lowest level since the beginning of the recession in December."

CEO John Challenger called 2009, a "bipolar year when it came to downsizing." The first half of 2009 reeled from the collapsed housing market, bank failures and the eroding auto and manufacturing sectors. As a result, "the recovery from this recession will undoubtedly be slow," Challenger said. But he added that "somewhere in the second or third quarter, we turned a corner and now as we begin 2010, there are promising signs of continued improvement."

Mass layoffs in the auto, retail and industrial manufacturing sectors are slowing. Government and nonprofit layoffs also fell, despite declining tax revenue that forced many local governments into the red in 2009, Challenger said. In some cases wage freezes, research cuts, the cash for clunkers program and other federal stimulus programs helped reduce the need for steeper layoffs over the past six months.

Challenger's clients announced 45,094 job cuts last month, 10 percent lower than in November, and the lowest since December 2007, when there were 44,416 job cuts. Challenger clients reported 166,348 job cuts just in December 2008. That compares to 155,121 cuts for the entire fourth quarter of 2009. That "is the lowest quarterly figure since the second quarter of 2000, when job cuts totaled 81,568," Challenger said. "Since July, announced layoffs have dropped an average of 14 percent each month."

Nationwide, the federal Bureau of Labor Statistics reported Wednesday that employers took 1,797 mass layoff actions in November that involved 165,346 workers. There were 330 fewer mass layoffs than in October.

Dee DePass • 612-673-7725

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