Unemployment Drops to 7.7%; 146,000 New Jobs Created

     The November numbers released today were better than expected as a steeper slowdown was expected, following Hurricane Sandy. The government suggested the full effects may not show till next month:

     "The U.S. economy created 146,000 new jobs and the unemployment rate slid to 7.7 percent, in a report much better than economists had expected."

     "Though most on Wall Street figured Superstorm Sandy to tamp down job growth, the Labor Department said the late-October storm that decimated the East Coast actually had little effect."

       http://www.cnbc.com/id/100289321

       Despite the better topline numbers, the news wasn't all good.

       "Overall, the report was well ahead of forecasts of about 93,000 new jobs, but internally the numbers showed considerable weakness. (Read More: US Jobs Market 7 Percent Better Than Last Year)."

       "It's good news against expectations, but that's about it," said Steve Blitz, chief economist at ITG Investment Research.

       "The Labor Department statistics had some puzzling contradictions, particularly in the assertion that Sandy "did not substantively impact" the jobs count for November, and in considerable downward revisions from previous months."

       "Also, the drop in the unemployment rate appeared to reflect little more than a continued exodus of workers from the labor force."

      "The labor force participation rate, already around 30-year lows, fell further in the month to 63.6 percent. That represented 350,000 fewer workers."

     "In all, there were a net 122,000 fewer people with jobs."

     Some were quiet bearish about the news.

     "Same old, same old. The government managed to get the unemployment rate down by shrinking the labor force and convincing a lot of people they're better off collecting unemployment benefits or living off welfare than working," said Peter Schiff, CEO and chief global strategist at Euro Pacific Capital. "It's more bogus government numbers."

      Still I'd take Schiff's verdict with a litle grain of salt. He's one of those conservative austerity lovers. He's got a piece in today's Wall Street Journal called "The Fantasy of a 91% Top Income Rate" where he claims that what's needed is to "close loopholes" and not raise rates on the rich. His book title should tip his hand further: "The Real Crash: America's Coming Bankruptcy." He may just be bashing the numbers as an excuse to bash President Obama.

      For Schiff's WSJ piece see here

      http://online.wsj.com/article/SB10001424127887324705104578151601554982808.html

      I may have more to say about this piece later.

      For another judgment on today's numbers from an actual economist who I put some stock in, here's Jared Bernstein-Biden's former head of the Economic Council of Advisers:

      "The job market in November performed notably better than expected, especially in light of expected damage to hiring from late October's Hurricane Sandy."

       http://www.huffingtonpost.com/jared-bernstein/november-jobs-report_b_2257230.html

       He points out that the construction market may show some ill effects from Sandy.

       "Construction data may, however, reveal some storm related effects, with jobs off 20,000 in November after growing slightly in prior months as the housing market has begun to show signs of life (we'll have to wait for the state data release later in the month to see if the losses were in affected states)."

         Overall:

         "Downward revisions took 49,000 jobs off of the September and October payroll counts, so, factoring in today's report, the average pace of payroll growth over the past three months is about 140,000 overall and 150,000 in the private sector. That pace is consistent with an economy growing at a decent clip and with a slowly declining unemployment rate. It is not, however, fast enough job growth to quickly reduce the large gaps in output, employment, and earnings that continue to hold back working families."

          "In sum, the good news is that Sandy doesn't appear to have disrupted work as much as we thought and that payrolls continue to expand at a steady pace. The less-good news is that the pace of job growth remains too slow to quickly bring down the jobless rate, pull more folks back into the job market, and give workers' paychecks a much-needed boost."

           The market rose on the numbers, then leveled off after a considerable drop in consumer confidence. However, the market now seems to be holding gains despite the drop. This is what's tough about macro analysis: there are so many indicatoras and counter indicators. I'll look at the consumer numbers in the next post but here's the link to the initial story.

            http://www.cnbc.com/id/100289812