The economy added only 74,000 jobs in December, a sharp drop from previous months and far below analysts’ expectations of 200,000 jobs.
At the same time, the unemployment rate fell from 7% to 6.7%, the lowest number in more than five years. But that decline was at least partly due to higher numbers of Americans dropping out of the labor market altogether—neither employed nor searching for work—for reasons that economists are still trying to sort out.
December’s weak report dampened last year’s overall job growth. In 2013, the economy added an average of 182,000 jobs per month, about the same as in the previous year. The slow but steady growth has keep the recovery moving along at a low gear. But long-term unemployment still remains stubbornly high, with 3.9 million still jobless for 27 weeks or more.
The disappointing numbers come as Congress is embroiled in a debate over emergency unemployment aid. Democrats will likely make the case that the weak job growth and high number of long-term employed are reason enough to continue the jobless benefits.
But December’s head-scratching report also makes it clear why it’s hard to extrapolate from monthly jobs reports. Unusually cold weather in December may have driven down construction jobs, which fell by 16,000 jobs. In addition, 273,000 workers couldn’t work because of bad weather—more than the 138,000 in a typical December.
The plunge in the unemployment rate, however, has raised questions about whether the Federal Reserve might accelerate the end of its stimulus program. The central bank previously said a 6.5% unemployment rate would be a reasonable indication that it should end its unprecedented bond-buying program.
