Unemployment rate dipped to 9.7 percent as job loss slowed down

The U.S. economy lost 20,000 net jobs during January, while the unemployment rate dipped to 9.7 percent in the month, from 10 percent in December, the government reported Friday.

The slowing pace of job loss provided signs that the economy was recovering after the longest recession since the Great Depression.

While construction companies and state and local governments cut back, manufacturing added 11,000 jobs in January, the first time in three years.

Despite encouraging indications for the future, the government’s monthly snapshot of the labor market revealed that last year’s collapse was considerably more severe than previously recorded. The Labor Department revised previous data to show that the economy contained 1.36 million fewer jobs in December, a downward adjustment of roughly 1 percent. The revisions showed the economy lost 150,000 jobs in December, far more than the 85,000 initially reported.

Economy expanded 5.7 percent in 4Q, the fastest in past 6 years

U.S. broadest measure of economic activity, gross domestic product, expanded at an annual rate of 5.7 percent in the fourth quarter, after a 2.2 percent increase the previous quarter. The growth rate was the fastest since the third quarter of 2003, when the economy grew at a rate of 6.9 percent.

Even though the fourth-quarter surge, the economy finished 2009 with its biggest contraction since 1946, when the country was still cooling off from World War II.

The single biggest factor in the strong growth rate last quarter was not consumers buying more, but businesses letting their stockpiles shrink at a slower rate than they had been previously.

As long as the labor market remains weak, consumers will be reluctant to spend money. That means businesses will need to look for other sources of demand, like exports. On net, the economy lost 208,000 nonfarm payroll jobs last quarter, and the unemployment rate rose to 10 percent, from 9.7 percent.

The nation’s output number can be subject to major revisions, especially when the economy is at a turning point. The annual growth rate initially reported by the government for the third quarter of 2009 was 3.5 percent, but was later revised to 2.2 percent. The government’s final tally of last quarter’s output will be released in March.

Meager rise in December, U.S. inflation under control

Inflation appears to be largely in check even as interest rates in the United States remain near zero and the government pumps billions into the economy. The consumer price index (CPI), a broad gauge of inflation, increased 0.1 percent in December, down from a 0.4 percent advance in November. This is the lowest rate since July.

The core CPI, which excludes food and energy costs, also rose 0.1 percent, a tick more than the unchanged reading in November.

By the end of 2009, prices had jumped 2.7 percent from the previous year. The core CPI rose 1.8 percent in 2009, the same rate as the prior year.

The meager rise in the CPI means Federal Reserve policy makers will probably keep interest rates at their historic lows for the immediate future.

Many economists believe inflation will not emerge as a threat for some time because of the large amount of excess capacity, high unemployment, and weak housing market.

Across the country, machines sit idle or are running at reduced capacity at many factories. A separate report released Friday said utilization reached 72 percent, the highest level in a year. Yet that remained far below the historic average of 80.9.

U.S. stocks ended first trading week of 2010 higher

U.S. stocks finished the first trading week of the year on a high note, with the major indexes all turning higher late in Friday's session. A disappointing employment report had weighed on stocks throughout the Friday.

The Dow Jones Industrial Average rose to 10,618.19, giving it a weekly rise of 1.8 percent, while the S&P 500 climbed to 1,144.98, up 2.7 percent for the week. The small cap index, Russell 2000 advanced to 644.69, progress 1.46 percent for the week, and the tech-focused Nasdaq Composite Index climbed to 2,317.17, a level that has it 2.1 percent ahead for the week.

This first week result failed to support the widely known January effect anomaly. While the large cap stock index, S&P 5000, was up 2.7 percent; the small cap index, Russell 2000 advanced only 1.46 percent.

U.S. Job Losses in December temper optimism for a swift recovery

U.S. economy shed 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.

The monthly figures from the Labor Department included a revision for November that showed a gain of 4,000 jobs, in contrast to initial reports showing a loss of 11,000 jobs. That was the first monthly improvement since the recession began two years ago.

During 2009, payrolls fell by 4.2 million. Since the recession began two years ago, payrolls have fallen by 7.3 million.

U.S. 3Q GDP revised down

The U.S. economy grew at the fastest pace in two years during the third quarter, but the revised annual growth rate of 2.2% was much slower than initially reported, the Commerce Department estimated Tuesday. The revisions to third-quarter GDP were in three major areas: Business investment, consumer spending, and inventories.

U.S. real gross domestic product increased for the first time since the spring of 2008, boosted by higher consumer spending, a rebound in investments in homes, a slower pace of inventory reduction, more exports, and robust government spending.

Surprising Positive Jobs Report in October

Surprising job market improvement adds confidence on the economic recovery. The U.S. unemployment rate went down to 10 percent from a 26-year high of 10.2 percent while only 11,000 jobs disappeared in October. This is the best economic news since the recession began two years ago

Although 15.4 million people are struggling to find work, the November report revealed signs of improvement across the country. More than 50,000 temporary workers were hired, the first surge in months and often a precursor to companies hiring permanent workers. Employees worked more hours, even in manufacturing.


The bright jobs report suggests that an end might be in sight for huge stimulus efforts and rock-bottom interest rates. It suggested to investors that the Federal Reserve might lift interest rates sooner than analysts had expected. Higher interest rates mean more lucrative returns for investors who hold dollars.

A strengthening dollar lured investors away from the stock market on Friday. As investors snapped up currencies, giving the dollar one of its best rallies of the year, stocks stumbled and spent much of the day meandering between gains and losses before ending the day in positive territory.

Many forecasters suggest that the turning point, from jobs being cut to jobs being added, will come by March, assuming the economy continues to grow, as it finally started to do in the third quarter.