How Bad, Really, was the Awful December U.S. Jobs Report?


Paradise, Near Mt. Rainier, Washington State

Check out this story in the Saturday Washington Post.

Today’s post comments on the very weak monthly “jobs report” for the US economy issued by the Federal Bureau of Labor Statistics (BLS).  The report said that businesses added 74,000 jobs last month in non-agricultural industries.  That’s a very disappointing number.  The economy has been adding about 200,000 jobs a month recently, and was expected to do a little better in December.  Even that amount of gain is weak for a “recovery,” but it is enough to keep pace with growth in the working age population.

This story was not buried.  If anything, it got more attention than deserved.  In fact, all of the monthly job reports get more exposure than deserved. But that’s another issue; and perhaps the subject of another blog post.

The low job growth number for December was especially puzzling because most other key indicators, like consumer confidence and new claims for unemployment insurance, point to an economy which seems poised to move into higher gear.  The report by BLS and virtually all newspaper and blogosphere stories said that cold weather in December probably contributed to the low job growth, but didn’t account for very much of the shortfall below the expected 200,000.  Vague stuff.   None of the reports I initially saw tried to estimate the impact of the snow and cold.  So, it was not clear how much to worry about the report.

As  I mentioned, the basic story about December job growth was not buried.  What did get buried was help in understanding what the BLS report means.  What would employment growth have been without the paralyzing freeze?   Why is everyone saying the weather played a part,  but not much in the sluggish growth?   The only attempt at that which I could find was in the Business Insider, from a senior economist, Ted Weisman,  at Morgan Stanley.

Weisman points out that a Census Bureau household survey conducted roughly over the same period that businesses reported the December job numbers to the BLS, showed that about 270,000 people reported  not working in December 2013 because of bad weather.  That a very large number  —  about twice as much as usual for the December period.   So, one might conclude that the unusually bad weather caused a temporary drop of 135,000 jobs in December; or that the BLS report would have showed 210,000 jobs if not for snow storms and Antarctic temperatures.  If, we’d be sailing, or sledding, right along.

But not so fast.  For various reasons, too wonkish to detail here — in fact Weisman doesn’t go into detail either —  he  concludes from the household survey that bad weather shaved about 50,000 to 75,000 jobs from the December BLS report; so that job growth would have otherwise been about 140,000.  That’s better than 74,000, though still disappointing.

I commend Mr. Weisman for taking the time to mine the data. I would have estimated the ad hoc, weather adjusted number a little above Weisman’s 140,000; at least so that I could sleep a little better till the data are revised.  Like Weisman, I’m not immediately reporting how I get there, but if you want to know, we can follow up in the comment phase.  Sleep tight!    And don’t let the data bugs bite!


3 thoughts on “How Bad, Really, was the Awful December U.S. Jobs Report?

  1. Alex MacLachlan

    Irv, the ADP payroll number that gets released a little before the BLS number is what a lot “estimators” go by for their BLS guess. It came in at around 238k. It also had a gain of 48k in construction jobs instead of the (-18k) that BLS had. A 60,000 swing is pretty wide. I also find it curious that no economists are factoring in the Federal Government taking over 16% of the US economy with thousands of pages of demands that change daily, but it being cold in December leading up to Christmas spending is somehow acceptable analysis. We could probably conclude Oct and Nov is the building of inventory for Christmas and the December “disappointment” is the facing of reality.


    1. Irv Lefberg Post author

      Thanks for really good comments, Alex. Yes, it is surprising that no economists I could find said anything about the possible impact of ACA. (I did think of that myself, but will tell you in a moment why I didn’t mention it). Not even the economists I read in WSJ, Business Insider, or Forbes mentioned ASA. Perhaps one of the bloggers has mentioned it in the days since the BLS report was issued. You did, here.

      Here is reason I didn’t mention it; and you could tell me if you think I’m off base or have any facts wrong: First, I do think its distinctly possible ACA has been having an impact on job growth, even though we’ve been averaging about 200K a month in new jobs for past year. Maybe that number would have been 250K or 300K without ACA? I don’t know, but its certainly possible. However, it doesn’t seem possible that ACA would have caused the number to drop to as low as 74K in December. Hasn’t the mandate on businesses been postponed? (If that’s right, then impact of ACA on previous months might have been relatively small too). I do think ACA, when/if fully implemented does provide an incentive for a business to remain below 50 employees, or restructure into two businesses that show up separately on the book, or to contract for new workers. And, ACA also seems to provide an incentive to reduce hours below the full time threshold…when those mandates are implemented. But I doubt any of this could have suddenly had a massive impact on December, above whatever impact ACA may have had in prior months.

      BTW I would have defined small business in ACA in terms of gross income, rather than number of employees. And, I wouldn’t have exempted part time employees, but rather based the employer contribution requirements on total payroll hours. Of course, if you do single payer, then you don’t have this mess. Granted, you may have other messes. 🙂 Thanks again for good comments.


  2. Alex MacLachlan

    Yes, all valid points, but if we agree with the stats that small business creates most of the new jobs and everything in the news is a disaster roll out, millions losing their policies, sticker shock, and disarray, that would seem to cause a lot of hesitancy. The over 50 employer mandate is another part of the problem and will play out this year and mostly before the midterms with cancellation notices in October, if they are going to come at all, but the under 50 companies are feeling just as anxious. Then add a Fed tapering and an overvalued stock market. Its more that I always hear weather factors from economists when there are plenty of 800 lb gorillas in the room being ignored. There is a large portion of the country’s economy having amazing weather this Winter, but you never hear “Great weather in December west of the Rockies caused extra construction and services hiring”, so, I’m suspicious. Maybe it gets revised upward because of the ADP numbers, but I don’t know. A lot is riding on all this optimism yet a lot of these corporate profits are suspect because of Fed manipulation, debt restructuring, stock buybacks, and firings. The New Normal isn’t creating much confidence, so 74k seems plausible and 200k sounds temporary.



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