The American economy lost another 85,000 jobs in December, and the unemployment rate held steady at 10 percent, tempering hopes for a swift and sustained recovery from the Great Recession.þþThe monthly report included a revision in November that indicated that the economy added 4,000 jobs in November — instead of a loss of 11,000 — the first gain in nearly two years. Another 16,000 job losses were added to October.þþWhile job losses increased, the rate remained the same, an indication that many more unemployment workers have given up their search.þþAlways important, the monthly jobs report from the Labor Department has emerged as the crucial indicator of economic health after the longest, deepest downturn since the Great Depression. While still depressed, the job losses have eased since earlier last year. þþIn Europe on Friday, the European Union’s statistics agency, said that the seasonally adjusted unemployment rate in the 16 euro countries rose to 10 percent in November from 9.9 percent in October and 8 percent in November 2008. That was the highest rate since 1998, a year before the euro was introduced. The number of unemployed in November rose 102,000, a still significant pace of increase although down from the monthly peak of 475,000 seen at the start of last year. þþFor years, ordinary people spent in excess of their incomes by borrowing against the value of homes, using abundant credit cards and tapping stock portfolios. þþBut home prices have plummeted in much of the country. Stock holdings have been diminished. Nervous banks have sliced credit even for healthy borrowers. That has left the paycheck as the primary source of spending power.þþEconomists are now divided over the nation’s prospects. Some place emphasis on recent expansion on the American factory floor, arguing that this presages broader improvements that will continue to gather steam.þþBut skeptics argue that the factory expansion merely reflects a rebuilding of inventories after many businesses slashed stocks during the panic that accompanied the fall of prominent financial institutions such as Lehman Brothers in the fall of 2008. Expansion has also been aided by $787 billion in federal spending aimed at stimulating growth, and by tax credits for home buyers.þþOnce these factors fade in coming months, the skeptics argue, that will leave the economy confronting the same challenges that have dogged it for more than two years — strapped households saturated in debt and worried about layoffs, curtailing spending; banks still anxious about losses to come on mortgage holdings, reluctant to lend; businesses unwilling to hire until they are certain that the recovery is solid.þþThose with the gloomiest outlooks fear a so-called double-dip recession, in which the economy resumes contracting. Others fear many years of stagnant growth much like Japan’s Lost Decade in the 1990s.þþThe one place of near-universal agreement is that the economy cannot fully recover until millions of jobs are created.þþAs workers at growing businesses take fresh wages and spend them at other businesses, that creates jobs for other workers — a virtuous cycle, in the parlance of economists.þþRecent months have produced tentative signs that such a cycle might indeed be unfolding, even as economists debate its sustainability. þþNew claims for unemployment insurance have fallen. The holiday shopping season showed measured improvement over one a year ago. Businesses have added temporary workers in what some experts construe as the beginning stages of wider hiring, as companies recognize fresh growth opportunities.þþNot least, the pace of job deterioration has slowed markedly, with a net loss of 11,000 jobs initially reported for November — hardly a happy number, but a dramatic improvement from the roughly 700,000 jobs that were disappearing each month early last year. þþBut the unexpectedly large decline in December challenged the view of steady improvement, heightening the prospect of a longer, more tentative recovery, or perhaps even a return to the grim days of contraction.þþAnd for millions of Americans, the search for a job continues.þþKumar G. Navile, 33, of Charlotte, N.C., has applied to 500 jobs across the country since he lost his job as an engineer a year ago. Each month, he finds himself about $600 short in his monthly expenses after the $1,680 he earns in unemployment benefits. He pays the difference from a savings account, but expects that money to dry up in the next two months.þþ“You get up every day and say today will be different, but it is mentally challenging when you don’t find opportunities,” Mr. Navile said. “I performed well in school. I got a job the day I graduated. It’s been a struggle, and it continues to be.”þþTo reduce his expenses, Mr. Navile is trying to sell his house. He pays $1,200 each month on his mortgage.þ
Source: NY Times
