Unemployment Rate Drops, But Picture Not All Rosy
SCOTT SIMON, HOST:
This is WEEKEND EDITION, from NPR News. I'm Scott Simon. Turns out that Superstorm Sandy didn't do as much damage as many expected, to the nation's unemployment predicament. At least, that's what the government's monthly data on the jobs market told us yesterday. As NPR's John Ydstie reports, analysts and businesses are already looking past that report, to the dangers to jobs posed by the fiscal cliff.
JOHN YDSTIE, BYLINE: One-hundred-and-forty-six-thousand jobs were added to business payrolls last month, according to the government. And the unemployment rate dropped a couple of ticks, to 7.7 percent. Nigel Gault, chief U.S. economist at the research firm IHS Global Insight, says the report didn't tell us much that's new about the U.S. economy.
NIGEL GAULT: Ah, 146,000 jobs is very similar to the average that we've seen so far, this year. It's still a very prolonged, sluggish recovery.
YDSTIE: There were no obvious signs of fiscal cliff fears in the jobs report, either, says Gault. But there are some indications of growing anxiety. Gault says a slowdown in business investment suggests nervousness about damage to the economy from the fiscal cliff's sharp tax hikes and spending cuts. And another report yesterday showed consumer confidence deflating as Americans finally began to realize their taxes could spike.
GAULT: The income taxes will be higher. They won't have that payroll tax cut anymore. So people have maybe started to work out exactly what it means. And they know that it will be a big hit to their pocketbooks. So - I think - finally, consumers are realizing this is a big issue.
YDSTIE: Businesses have been quicker to respond to the potential economic challenges created by the fiscal cliff. That's reflected in the pullback in business investment in recent months. Dyke Messinger, who runs Power Curbers - a small, construction-equipment business in Salisbury, North Carolina - says his business is picking up as the U.S. housing market begins to improve. Orders are increasing enough to add more workers, he says. But he's not sure what's going to happen, so he's holding off.
DYKE MESSINGER: I just don't know. And just that fact alone causes our customers, ourselves, our suppliers - everybody just, you know, cocoons. And nobody's going to make any plans until they see what does happen.
YDSTIE: Messinger runs a small business, with around 60 employees. But big businesses are watching the drama in Washington closely, too. Arie Ball is vice president for talent acquisition at Sodexo, a company with hundreds of thousands of employees in many lines of business worldwide.
ARIE BALL: I think a big piece of what's going to happen is, you know, consumer confidence. When people, you know, have confidence in government and in the economy, they spend more. And that's, obviously, going to have an impact on jobs.
YDSTIE: Including in many of Sodexo's businesses, like construction and corporate-support services. While going over the fiscal cliff could cause a drop in consumer confidence and spending that many think would push the economy into recession, getting a deal could have the opposite effect. Dyke Messinger says if the White House and Congress did reach a credible agreement, the whole outlook could change.
MESSINGER: People would be confident; they'd be more willing to invest; they'd say, we're at least - you know, charted the country on a different, and a better, course. I think it would be tremendous.
YDSTIE: Messinger says if a credible deal is struck, he'll be in a hiring mode next year, probably adding as many as five new jobs at his company.
John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.