WASHINGTON — The economy ended the worst year of employment losses since the Great Depression with an unexpectedly large drop of 85,000 jobs in December, dimming hopes of a quick upswing in hiring and intensifying Washington's partisan fight over how to create more opportunities for workers.
The national unemployment rate for the month was unchanged from November at 10 percent, the government said Friday, but that was only because droves of people, including many discouraged about the prospects of finding work, dropped out of the labor force and were no longer counted as unemployed.
"The increased number of discouraged workers is masking the true extent of joblessness," said Anne Kim, economic program director at Third Way, a liberal policy think tank in Washington.
In the Northern San Joaquin Valley, the unemployment numbers are even worse — 17.5 percent in November in Stanislaus County, 18.3 percent in Merced and 16.9 percent in San Joaquin.
The latest report was all the more disappointing because the employment data for November raised hopes that the steep two-year employment decline had hit bottom. Revised figures released Friday by the Bureau of Labor Statistics showed the economy added a net 4,000 jobs in November instead of losing 11,000 as initially estimated.
But in December, there were once again large payroll cuts in construction and manufacturing, possibly inflated a bit by the weather, as well as smaller losses in other industries.
Job increases in health and education services, in addition to the temporary-help industry, were not large enough to offset them.
Obama stresses jobs' import
Many economists had projected the December report would show essentially zero job growth, with some forecasting a small increase that would be the beginning of a robust recovery in hiring in the not-too-distant future.
The latest employment numbers "are a reminder that the road to recovery is never straight and that we have to continue to work every single day to get our economy moving again," President Obama said. "For most Americans, and for me, that means jobs."
Republican leaders pounced on Friday's report to attack the Obama administration's deficit spending and economic policies, and liberal groups insisted that this was not the time to pull back from stimulus programs aimed at spurring job growth and helping the millions of unemployed Americans with safety net programs.
"There's no way around saying it was something of a setback from what we had seen in November," said Christina Romer, chairman of the White House Council of Economic Advisors. "We now know that we added jobs in November. I want to be adding hundreds of thousands of jobs a month."
Dean Baker, co-director of the Center for Economic and Policy Research in Washington, said the latest report was so bad that it casts doubt on an imminent positive turn in job growth, let alone a robust one. "It's totally plausible we're going to lose jobs for several more months in 2010," he said.
If that happens, it would prolong the suffering of millions of American workers and could pose a serious threat to the sustainability of the broader economic recovery, which has been gaining some momentum.
By the latest tally, the economy has shed about 7.3 million jobs since December 2007, almost half of them since Obama's $787 billion economic stimulus program was passed in February.
Record decline in labor force
At the White House, Obama stressed the importance of winning the global competition to develop renewable energy sources, which he and others believe will accelerate job growth.
One stark statistic in the latest report is the staggering number of people who dropped out of the labor force in December and in previous recent months.
In December, the number of people working or looking for work totaled 153.06 million. That is a decline of 661,000 from November and more than 1.5 million from December 2008. The last time there was an annual decline in the labor force was in 1951.
It's not that the nation's population is shrinking. Before the recession, the labor force had been growing at about 1 percent a year, in tandem with the growth of the working-age population.
But the severe recession has prompted many discouraged people to give up looking for work. Others are delaying entering the work force by getting additional schooling or simply staying at home.
The economy needs to create roughly 125,000 net jobs a month to keep pace with the growing population and work force. Economists say it will take sustained payroll growth of at least that much monthly to make an appreciable dent in the unemployment rate.
Most forecasters believe it will take several years to make up for the approximately 8 million jobs that have been lost since late 2007.