The unemployment rate drops to 9.4 percent, U.S. adds only 103,000 jobs in December

NEW YORK - OCTOBER 08: Dale Chandler's unemployment insurance notice sits on a table on October 8, 2010 in the Brooklyn borough of New York City. The U.S. government reported today that the U.S. economy continued to shed jobs for the month of September. The unemployment rate remained unchanged at 9.6 percent in August

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JEREMY HOBSON: Now let's get to the big jobs report. The Labor Department said this morning that the U.S. economy added 103,000 jobs in December. That was entirely driven by the private sector. In fact government jobs dropped by 10,000 last month. The unemployment rate dropped from 9.8 percent down to 9.4 percent.

Let's bring in Hugh Johnson -- who runs the asset-management firm Hugh Johnson advisers. He's with us now live from Albany. Good morning.

HUGH JOHNSON: Good morning Jeremy.

HOBSON: So let's get your reaction first to these numbers.

JOHNSON: Disappointing. 103,000 jobs added to payrolls was well below both my expectations and I would say just about everybody's expectations. Going into the number we've been expecting about 150,000 jobs would be added to payrolls. And frankly with some of the recent economic numbers that we've seen we were kind of hoping that 200,000 would be added to payroll. So 103,000 added to payroll in December was very anemic and very disappointing.

HOBSON: What about the 9.4 unemployment rate? That's a drop.

JOHNSON: Yeah, that's a drop and at first blush that kind of looks like a really good number, but you have to look very carefully at it. The reason that you had the decline in the unemployment rate was a very sharp decline, and unexpected decline in the size of the labor force. And the reason the labor force declined so sharply is if you look at the numbers, you see that the number of workers that became very discouraged and simply dropped out of the labor force stopped looking for jobs, dropped out of the labor force, was very substantial. So what looks like a good number declined from 9.8 to 9.4 percent when you look at it a little more closely is not such a good number, it is a little bit disappointing also. Again both of these together suggest that maybe the economy is expanding, but it's expanding at an extraordinarily anemic pace.

HOBSON: Hugh Johnson, of Hugh Johnson Advisers, joining us from Albany, thanks for your insight this morning.

JOHNSON: You're welcome.

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