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December 07, 2012
WASHINGTON — Despite better than expected job growth in November, analysts say the US economy is far from healthy. U.S. companies added 146 thousand jobs in November and the unemployment rate fell two tenths of a percent to 7.7 - the lowest since December 2008. The better than expected job numbers, however, don't tell the whole story.
Despite wreaking havoc in the Northeast states and devastating hundreds of businesses, Hurricane Sandy's impact on jobs appears to have been minimal. The Bureau of Labor Statistics says U.S. companies hired more workers than expected in November, sending the nation's unemployment rate to a four-year low.
But Yahoo Finance expert Aaron Task said the rate fell for the wrong reasons.
"A lot of people dropped out of the labor force. That's why the unemployment rate went down, not because 146,000 jobs were added. You had over 300,000 people who essentially gave up looking for jobs," said Task.
Others say unemployment is becoming chronic. Although the economy has been recovering for three years, labor market economist Heidi Shierholz said the job market is still in crisis mode.
"Over the last year, we have seen some real improvement but it's been so modest and the hole we have to dig out of is so steep that we literally have a gap in the labor market of around nine million jobs," said economist Heidi Shierholz.
Instead of focusing on how many Americans are out of work, Chuck Vollmer - a blogger and author of the book "Jobenomics" - said U.S. policy must address ways to expand the current workforce, estimated at more than 100 million.
"People tend to look at the unemployment numbers. What I'm saying, let's look at the employment numbers, let's look at this bottom group here, the 122 or the 102 million and let's grow it to 122 million," said Vollmer.
To do that, Vollmer said U.S. policy needs to be more supportive of small businesses.
But a bigger economic threat may be looming by year's end.
At a Senate hearing Thursday, economist Mark Zandi warned that political dysfunction and the inability of Washington lawmakers to deal with coming tax hikes and budget cuts - the so called fiscal cliff - could lead to a loss in business confidence.
"It hasn't affected hiring and layoff decisions yet, but it will if we get into next year and we get into February and we haven't nailed this down, the economy and investors will bail and the economy will begin to struggle," said Zandi.
On Wall Street, investors paid little attention to long-term issues and focused more on the better-than-expected numbers, pushing major stock indexes firmly into positive territory.
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