Still, hiring remains short of what Fed officials have said they want to see before reducing their unprecedented easing measures. Payrolls expanded by 146,000 in November and 138,000 in October. Bernanke said in a September press conference that payrolls growth in the prior six months, in which it averaged 119,000 a month, isn’t the kind of “ongoing, sustained improvement” in the labor market policy makers want to see.
Economists expect little change when the Labor Department releases its report for December at 8:30 a.m. tomorrow. The median estimate in a Bloomberg survey projects that employers added 150,000 jobs and the unemployment rate remained at 7.7 percent.
Joblessness has fallen to a four-year low from a 26-year high of 10 percent in 2009. Still, that compares with an average of 5.8 percent since the government began collecting the data in 1948, and a rate as low as 4.4 percent in 2007. Almost 4.8 million Americans have been out of work for six months or more, and they account for 40 percent of the total number who are out of work, Labor Department data show.
“The conditions now prevailing in the job market represent an enormous waste of human and economic potential,” Bernanke said at a Dec. 12 press conference. “A return to broad-based prosperity will require sustained improvement in the job market, which in turn requires stronger economic growth.”
Gross domestic product expanded by 3.1 percent in the third quarter, rebounding after growth slowed to 1.3 percent in the second quarter from 2 percent in the first quarter, according to Commerce Department data.
The U.S. economic expansion probably will be crimped without being halted by Congress’s budget deal, which permanently reinstates the income tax cuts for most workers that ended Dec. 31, continues expanded unemployment benefits and delays automatic spending cuts for two months. It would let a 2 percentage-point payroll-tax cut expire.
The elimination of the payroll-tax cut, coupled with higher income taxes on the wealthy, will help clip growth in the first quarter to 1 percent, from 3.1 percent in 2012’s third quarter, the latest data available, according to economists at JPMorgan Chase & Co. and Bank of America Corp.
“The U.S. consumer continues to be stronger and housing gets better,” Jeffrey Immelt, chairman and chief executive officer at General Electric Co., said at a Dec. 17 investor meeting. “But there’s no doubt that the fiscal uncertainty slowed activity in the fourth quarter of the year.”