U.S. employers added only 74,000 jobs in December and the unemployment rate fell to 6.7 percent, down from its previous rate of 7 percent, the Bureau of Labor Statistics reported Friday.
But here's the thing: People who have given up looking for work account for nearly two-thirds of the unemployment rate -- and at least one news outlets has taken notice:
The U-6 unemployment rate, considered a broader measure of actual unemployment in the U.S., held steady at 13.1 percent, its best posting since around November 2008.
The labor force participation rate, on the other hand, dropped to 62.8 percent, down from its previous rate of 63.0 percent. This economic indicator has not been this bad since March 1978:
The decline in both unemployment and labor force participation comes just weeks after the United States Federal Reserve announced it would drawdown its multibillion-dollar quantitative easing policies. The Fed said in December that it would taper its $85 billion monthly purchases of Treasurys and Treasury mortgage-backed securities by $5 billion each starting in January.
Industries, including transportation and warehousing, financial activities, leisure and hospitality, and government, saw virtually no change in employment in December.
Further, according to Friday’s report, “the employment-population ratio was unchanged at 58.6 percent.”
Here’s unemployment broken up by group:
- Men: 6.3 Percent (previous: 6.7 percent)
- Women: 6.0 percent (previous: 6.2 percent)
- Teenagers: 20.2 percent (previous: 20.8 percent)
- Whites: 5.9 percent (previous: 6.2 percent)
- Blacks: 11.9 percent (previous: 12.5 percent)
- Hispanics: 8.3 percent (previous: 8.7 percent)
- Asians (not seasonally adjusted): 4.1 percent (previous: 5.3 percent)
The number of long-term unemployed declined by roughly 894,000 over 2013, according to the report.
Meanwhile, the number of persons “marginally attached” to the labor force in December increased to 2.4 million, up from its previous posting of 2.1 million.
“These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey,” the report reads.
Among the marginally attached, there were 917,000 discouraged workers in December, down by 151,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force in December had not searched for work for reasons such as school attendance or family responsibilities.
FINAL THOUGHT: December's jobs numbers are an obvious disappointment for those who had hoped the economy would see an uptick in 2014. The report is also a major miss from earlier estimates that had put the December jobs number at around 197,000. However, it’s important to note that the December numbers will go through a few revisions, meaning that 74,000 figure may see at least a slight increase.
Lastly, for a little perspective, it’s worth noting that if labor force participation rate was the same as one year ago, today’s jobless rate would have been roughly 7.9 percent.
Markets look ready to open lower on the bad news:
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This post has been updated.