Stock Market Rallies On Positive Jobs Report
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We're going to take a look now at some economic indicators, and here's one number to start, 14,000. Today, the Dow closed above 14,000 for the first time since 2007. It seems the market liked what it saw in this morning's report from the Labor Department. Employers added 157,000 jobs last month, another example of slow but steady growth in the job market.
But the unemployment rate ticked up a notch to 7.9 percent. That underlines problems with the pace of job growth, as NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: Today's report portrays a job market that is in some important ways still treading water. Randall Kroszner is a former Federal Reserve governor who now teaches at the University of Chicago's Booth School of Business.
RANDALL KROSZNER: The employment rate a year ago was slightly over 8 percent. The unemployment rate today is slightly under eight percent. That's a sideways slide. That's not much progress.
ZARROLI: The report says modest gains in retail and health care hiring. There was also a better-than-expected increase in construction jobs. One more indication that the housing market is rebounding. Alan Krueger heads the president's Council of Economic Advisers.
ALAN KRUEGER: Housing was ground zero for the economic and financial crisis. The numbers today indicate that over the last two years we've added 300,000 construction jobs. But over the last four months almost 100,000. So that's an encouraging sign.
ZARROLI: Another encouraging sign was that job growth in November and December was a good bit higher than first estimated. As it does every January, the Labor Department revises job data for the preceding year. The latest revisions showed that employers added 181,000 jobs a month on average last year. That's a good bit stronger than earlier estimates and that may have been what pushed stock prices higher.
But the Labor Department report also portrayed a job market that still has plenty of slack. The report shows that the length of the average work week stayed the same in January, an average hourly earnings posted at best modest gains. Heidi Shierholz is an economist at the Economic Policy Institute.
HEIDI SHIERHOLZ: If your employer knows you don't have outside options, they have very little incentives to offer you substantial wage increases.
ZARROLI: At the same time, Americans were effectively hit with sizeable tax increases in January, and not just those who make a lot of money. A payroll tax holiday was allowed to expire and that left people further down the ladder with less money to spend. Shierholz says that's bound to have an impact on the economy and eventually on the job market.
SHIERHOLZ: That payroll tax holiday alone is likely to cost us around 400,000 jobs relative to what it would have been if we hadn't seen that expiration.
ZARROLI: Meanwhile, Congress has been locked in an ongoing fight over federal spending. Republicans have agreed to lift the debt ceiling temporarily but they have also made clear they're not giving up the fight. Randall Kroszner says this is taking a toll on the economy.
KROSZNER: With such incredible uncertainty on the fiscal side, I think it's just hard to see a strong recovery coming back.
ZARROLI: Other economists were more optimistic. They see a resilient job market that has racked up steady gains for 35 months in a row, even if the pace of those gains have sometimes seemed agonizingly slow. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.