SALON

Friday, Feb 1, 2013 12:15 PM UTC

Solid Jan. hiring would boost hopes for US economy

By

Topics: From the Wires,

Solid Jan. hiring would boost hopes for US economyIn this Wednesday, Jan. 16, 2013, photo, perspective job seekers talk with employers during a job fair in Cuyahoga Falls, Ohio. The number of Americans seeking unemployment aid jumped last week, though the increase mostly reflected difficulties the government has seasonally adjusting its numbers. Applications are still at levels signaling modest hiring. (AP Photo/Tony Dejak) (Credit: AP)

WASHINGTON (AP) — The January employment report is expected to show Friday that job growth remained steady last month even though Americans began receiving smaller paychecks that could keep the economy sluggish.

Economists forecast that the economy added 155,000 jobs in January and that the unemployment rate stayed at 7.8 percent for a third straight month, according to a survey by FactSet.

The Labor Department will release the report at 8:30 a.m. EST.

The economy has averaged about 150,000 additional jobs a month over the past two years, not enough to rapidly reduce still-high unemployment.

Still, even modest hiring would cushion the impact of the higher Social Security taxes that most consumers are paying this year. And it would help the economy resume growing after it shrank at an annual rate of 0.1 percent in the October-December quarter.

Higher Social Security taxes are reducing take-home pay for most Americans. A person earning $50,000 a year will have about $1,000 less to spend in 2013. A household with two high-paid workers will have up to $4,500 less.

Analysts expect the Social Security tax increase to shave about a half-point off economic growth in 2013 given that consumers drive about 70 percent of economic activity.

The hit to consumers is coming at a precarious moment for the economy. It contracted in the fourth quarter for the first time in 3½ years. The decline was driven largely by a steep cut in defense spending and a drop in exports. Analysts generally think those factors will prove temporary and that the economy will resume growing.

Still, the contraction last quarter points to what are likely to be key challenges for the economy this year: the prospect of sharp government spending cuts and uncertainty over whether Congress will agree to raise the federal borrowing cap.

Most analysts predict that the economy will grow again in the January-March quarter, though likely at a lackluster annual rate of around 1 percent. They expect the economy to expand about 2 percent for the full year.

Two key drivers of growth improved last quarter: Consumer spending increased at a faster pace. And businesses invested more in equipment and software.

In addition, homebuilders are stepping up construction to meet rising demand. That could generate more construction jobs.

And home prices are rising steadily. That tends to make Americans feel wealthier and more likely to spend. Housing could add as much as 1 percentage point to economic growth this year, some economists estimate.

Auto sales reached their highest level in five years in 2012 and are expected to keep growing this year. That’s boosting production and hiring at U.S. automakers and their suppliers.

Some recent signs suggest that the job market is holding steady and may even improve a bit. The average number of people seeking unemployment aid each week in the past month is near a four-year low.

Weekly applications for unemployment benefits were distorted in January by the government’s difficulties in seasonally adjusting its figures in January. Even so, applications are gradually ticking down, economists say.

Payroll provider ADP said Wednesday that private U.S. businesses added 192,000 jobs in January, up from 185,000 in December. Most of the gains came from small businesses, the ADP data showed.

The department will revise its estimates of job gains for the past five years on Friday. The changes are expected to show that the economy added more jobs in 2012 than previously thought.

More By Christopher S. Rugaber.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Paul Krugman’s right: Austerity kills. "In an economy where we’re all in the same boat, one person’s spending is another person’s income. So when the government cuts spending, it reduces people’s income, leading to less business, more unemployment, and a vicious spiral of slowing down the economy."
381 points382 points | 412 comments
vote
Paul Krugman’s right: Austerity kills -- radical cuts destroy economies and lives, and the honest numbers and economics keep proving it
190 points191 points | 27 comments
vote
Virginia state Sen. Mark Obenshain wants to send women to jail who don't report their miscarriages to the police
185 points186 points | 23 comments
vote
Corporate greed is poisoning America — literally
141 points142 points | 17 comments
vote
Facebook “like” on trial in Virginia
30 points31 points | 6 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations