Finance Helper

The Labor Department released it’s December job’s report on Friday which saw job losses climb once again, after revisions showed a slight gain of 4,000 jobs from November. While the unemployment rate remained at 10%, that figure is a little misleading because it doesn’t factor in the growing number of people that have stopped looking for work.

Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.

While the pace of job losses has definitely slowed over the past few months, many economists still expect a weak labor market for years to come. The unemployment rate has doubled from 5% and over 7 million jobs have been lost since December 2007.

That being said many forecasts expect the economy to grow around 3% this year but the main reason will be that there is still a lot of government stimulus that is working it’s way through the system. But while inflation is not a problem for the moment, it is something the central bank will have to deal with eventually.

It’s going to take a few years for the labor market to recover even in the best case scenarios but the Fed will likely have to tighten it’s monetary policy before that happens. While they would like to keep interest rates at near zero for as long as possible, many investors are betting that the Fed will start raising rates by the summer.

If there is to be any stimulus to the labor market, it will have to come from the federal government program through fiscal spending but with the huge budget deficits from the last two years that could be quite difficult.

Source: www.banks.com.