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 Related Stories
- Limbaugh: No one willing to impeach the first black president
- Tornado reduces Oklahoma City suburb to rubble
- Entire Midwest on tornado warning
- Oregon senator proposes appeal to Monsanto Protection Act
- Supreme Court to rule on prayer at government meetings
- Beltway scandal machine breaks, knows nothing about America
- Gitmo hunger striker launches Twitter campaign
- "Hero" cop, honored by Obama, accused of double rape
- Father of gay high school student arrested for dating classmate speaks out
- Pentagon adviser pushed Anthrax drug, which his firm produced
- Conservatives A-OK with closeted Boy Scouts
- The new geography of poverty
- Promotion for NYPD cop who cost city $1.5m in settlements
- Obama to all-male university graduates: Be the best husband to "your boyfriend or partner"
- The truth in Kanye's anti-prison rap
- GOP attorney general candidate tried to force women to report miscarriages to police
- Chinese hackers resume attacks against U.S.
- Must-see morning clip: Facial recognition software identifies "faceprints"
- Georgian police slow to react to mob violence at gay rights march
- Xenophobia only benefits the 1 percent
- Syrian troops move into strategic, rebel-held town
Featured Slide Shows
The week in 10 picsclose X
- 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
- 1 of 11