Job creation is up: hope amid depressing unemployment news
December 07, 2010
In the wake of the U.S. Department of Labor's depressing jobs report for November, Gallup's Job Creation Index provides a glimmer of hope.
According to the index, job creation reached its highest level in November in more than two years. The nationwide index hit a positive 11, the best reading since September 2008, Gallup said. The Midwest, at 15, showed the most strength, while the West, at 5, appeared weakest. The South's index hit 13, while the East posted 11.
Layoffs and unemployment still rampant
The index is based on self-reports from 15,163 U.S. employees of hiring and layoffs at their workplaces. Last month, according to Gallup, 30 percent of workers nationwide reported their employers were hiring, and 19 percent reported their employers were letting people go. That's a marked improvement from January of this year when 23 percent of firms were hiring and 24 percent were firing, but the percentage is still high.
Any improvement is good news, of course, but there's a big difference between a glimmer of a hope and a beacon signaling a true turnaround. National unemployment rose to 9.8 percent in November from October's grim 9.6 percent, according to the Labor Departments most recent figures. The nationwide unemployment rate has run at 9.5 percent or more for the last 16 months. In hard-hit states, such as Nevada, it's been even worse, topping 14 percent in some months.
What the Fed has to say
In a rare prime-time television interview Dec. 5 with CBS' "60 Minutes," Federal Reserve Chairman Ben Bernanke said of the 8.5 million jobs lost in the recession, the economy has gotten back only 1 million of them.
"It could be four or five years before we are back to a normal unemployment rate, somewhere in the vicinity of 5 or 6 percent," he said in the interview.
Especially troubling to Bernanke is that more than 40 percent of unemployed workers have been out of jobs for six months or more. At that point, people's skills erode, and their attachment to the labor force diminishes, he said.
The Fed chairman said he doesn't expect the economy to slip back into recession, although he added it could without action from the Federal Reserve. Last month, Federal Reserve officials agreed to buy $600 billion in U.S. Treasuries to hold down long-term interest rates and stimulate the economy -- good news if you're hoping current mortgage rates will stay at historic lows, not-so-good news if you want better returns on savings accounts and money market accounts.