While economists had projected more than 200,000 jobs would have been created in December, Friday's report by the Bureau of Labor Statistics reported on 74,000 new jobs. Unemployment dipped from 7 percent to 6.7 percent, but only because 347,000 adults left the workforce.
"The median forecast of 37 economists surveyed by USA Today was for a gain of 205,000 jobs last month," USA Today reported. "Nearly a third raised their projections after payroll processor ADP's survey this week showed businesses adding 238,000 jobs in December, the most in 13 months. Other surveys of economists pointed to gains of 197,000 to 200,000."
Is bad weather to blame?
"Given the disappointing jobs report flies in the face of nearly every other labor market metric of late, all which point to a strengthening trend, we would put most of the surprise down to bad weather rather than a bad economy," Jennifer Lee, a senior economist at BMO Capital Markets in Toronto told Reuters.
Reuters also reported that the Federal Reserve has announced further tapering of the stimulus, on the assumption that the economy is recovering, trimming its "monthly bond purchases to $75 billion from $85 billion starting in January, and many economists expect it to decide on a similar-sized cut at its next meeting on Jan. 28-29."
"The Fed will see through it as a weather issue," John Canally, an economist at LPL Financial in Boston told Reuters. "I don't think they will change after one month of anything bad or good - so they are going to stay the course."
"Nonsense," said conservative pundit Ed Morrissey at Hot Air. "This data is seasonally adjusted, and December wasn’t spectacularly cold. The polar vortex hit well after the new year (and may make a dent in January’s numbers). This looks like an excuse for being blindsided by a bad report, because Reuters’ own economists predicted gains of 196,000 for December."
But Forbes quotes multiple economists who viewed the poor jobs report as a blip likely to quickly be erased. Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, told Forbes: “The Conference Board’s Leading Economic Indicators and the results from the latest survey of purchasing managers are two economic readings that suggest employment gains will rebound in the New Year.”
The weak jobs report comes against a backdrop of political maneuvering over extending long-term unemployment insurance. Democrats are pushing for the extension, citing many long-term unemployed who may otherwise be driven from the workforce altogether.
"Senate Democrats are closing in on an agreement to pay for an 11-month extension of unemployment benefits with spending cuts that would not go into effect for at least a decade," The Washington Post's Greg Sargent reported on Thursday. "This would probably be acceptable to liberals, because it would sustain a lifeline for the jobless right now, while pushing off any damage the 'pay for' would do deep into the future."