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Unemployment Drops To Five-Year Low
Originally published on Wed December 11, 2013 3:22 pm
MELISSA BLOCK, HOST:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
ROBERT SIEGEL, HOST:
And I'm Robert Siegel. The unemployment rate hit a five-year low in November. That's according to the government's latest monthly jobs report. The other headline, the economy beat expectations adding more than 200,000 jobs. NPR's John Ydstie has more on what that says about the health of the economy and about whether the Federal Reserve might dial back its stimulus efforts.
JOHN YDSTIE, BYLINE: The big drop in the unemployment rate from 7.3 percent to 7 percent was partly due to federal workers returning to their jobs after the government shutdown. But it also reflects solid job growth. The government survey of businesses showed 203,000 new jobs were added to payrolls in November, about average for the past 12 months.
One of the businesses adding jobs is a fan manufacturer with at slightly off-color name, Big Ass Fans. Its logo is the backside of a donkey. And CEO Carey Smith says they do make big fans.
CAREY SMITH: From five feet in diameter to over 24 feet in diameter.
YDSTIE: Many of those fans hang in factories, but the company also has a line of household ceiling fans. Smith says he's added 150 workers since the beginning of the year, bringing his total workforce to about 450 employees. He signed up 16 new workers in November.
SMITH: I just was introduced to several of them this morning walking into the office, so we're active in terms of hiring.
YDSTIE: Smith says orders are growing for his products both in the U.S. and abroad, which is a positive sign.
SMITH: From our perspective, there's no doubt that the economy is increasing growth at an increasing rate.
YDSTIE: David Kelly, chief global strategist for JP Morgan Funds, says today's jobs report shows the economy is improving.
DAVID KELLY: The most important thing to recognize is that we don't have a lot of new workers so even a small gain in the number of jobs is actually pushing down the unemployment rate.
YDSTIE: Monthly job growth of about 195,000 over the past 12 months has been enough to push the unemployment rate down from almost eight percent to seven percent now. That's partly because there's been virtually no growth in the labor force. Kelly argues that's largely because baby boomers are retiring, not because discouraged workers are continuing to leave the pool of available workers.
KELLY: They actually surveyed for the number of discouraged workers, people who say there are no jobs out there for them and, in fact, that fell to a four-year low in the report today.
YDSTIE: Kelly says today's report is more evidence that the Federal Reserve should begin winding down its $85 billion a month bond-buying stimulus program. He says there's a 50/50 chance it will at its meeting later this month. But Randall Kroszner, a former Federal Reserve governor, thinks today's employment data provide ammunition for Fed policymakers with differing views. Here's the argument for policymakers who want to reduce the stimulus.
RANDALL KROSZNER: People could point to consistent job growth over the last six months, over the last 12 months, and they could then say that we are on the path for sustainable recovery and we should move. Others will say, well, wait a minute. We're still not quite there yet.
YDSTIE: And that group could point to the continued high level of long term unemployment as a reason to continue the stimulus. Both Kroszner and Kelly believe that agreement on the budget deal currently being negotiated in Congress could give the Fed the confidence to begin reducing the stimulus in December.
The stock market put aside its fears of that possibility today and the major indexes rose significantly. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.