Lower unemployment rate may mean people just gave up looking for jobs

Reporting from Washington â€”  The nation’s unemployment rate dipped last month to the lowest level since the spring of 2009. Still, the economy created substantially fewer new jobs than had been expected – a painful reminder of just how slow the jobs recovery may continue to be.

The Labor Department said Friday that a modest 103,000 jobs were added nationwide in December, suggesting that the drop in unemployment stemmed in large part from more workers giving up looking for jobs.

The jobless rate, which is the percentage of workers who report that they are looking for work but cannot find it, fell from 9.8% in November to 9.4% in December.

The Labor Department said all of the new jobs last month were generated in the private sector, mostly in healthcare and hospitality services. State and local governments continued to shed workers in the face of budget pressures.

Most economists were expecting about 150,000 new jobs in December, as recent unemployment filings, private employment surveys and other economic indicators suggested a possible acceleration of hiring. But far from being a breakthrough month, the net job creation in December was similar to the weak monthly average for all of 2010.

President Obama accentuated the positive elements in the report, noting that with the December numbers, the nation has seen 12 straight months of private-sector job growth.

“That’s the first time that’s been true since 2006,� he said in remarks Friday in Maryland as he toured a manufacturing plant, in what has become almost routine practice on the day of the monthly jobs’ release.

Private economists, however, were far less enthusiastic about the report.

“It was the same old slog story,� said Heidi Shierholz, a labor expert at the Economic Policy Institute. “I think the hope of a quick pickup is premature.�

Federal Reserve Chairman Ben S. Bernanke conveyed a similarly cautious tone. Appearing Friday at a Senate Budget Committee hearing, he said that even though the economic recovery was gathering strength in 2011, with consumer spending in particular picking up, “it could take four to five more years for the job market to normalize fully.�

Normally the U.S. unemployment rate would be around 5%. To get there in four years, Shierholz reckons that the U.S. would need to create, on average, about 335,000 jobs a month – which is triple the rate of job additions last year.

That’s because the economy lost about 8.5 million jobs in 2008 and 2009. And last year, it recovered only 1.1 million of that. But the actual number of new jobs needed is even larger because of the natural population growth. Economists say about 100,000 to 125,000 new jobs have to be added every month just to keep pace with new entrants to the work force.

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