The bailout of the car industry was worth it, and growth will cheer Obama – but there are some worrying long-term trends

The latest US jobs numbers proved surprisingly strong, and will be a further boost to president Barack Obama as he gears up for an election that will be all about the economy.

Nonfarm payrolls rose by 243,000 last month, the labour department said on Friday, marking the biggest gain since April. The jobless rate fell by two-tenths of a point to 8.3%, the lowest it has been since February 2009.

A closer look at the numbers shows some bright signs for the US economy – but also some worrying long-term trends.

The auto bailout was worth it

Manufacturing jobs numbers rose 50,000 last month, with 8,000 of those jobs were specifically in car parts. Chrysler announced this week that it is adding another 1,800 jobs, and by the summer expects to have added 4,000 new jobs since it emerged from bankruptcy.

As long as this trend continues, you can expect the car industry to be a major part in Obama’s election campaign. At the Washington auto show earlier this month, Obama said: “On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen.”

Or, as vice-president Joe Biden put it: “Osama bin Laden is dead and General Motors is alive.”

We’re out of the post-Christmas blues

The official figures brushed off earlier reports pointing to worrying signs in the job market. Outplacement firm Challenger, Gray, Christmas reported a 28% surge in lay-offs in January, traditionally a bad month for jobs. But the broad based recovery shook off the post-Christmas blues. Alongside manufacturing there was good growth in business services, healthcare, leisure and hospitality and even construction, hard hit by the still lacklustre jobs market.

But don’t count your chickens

The recovery in the jobs market is broad, but we have been here before. David Semmens, US economist at Standard Chartered, said we had seen a similar pick-up in the first four months of 2011. Then Japan was rocked by disaster and the European debt crisis took hold, wiping out gains. “This feels more sustainable but we need a few more months before people really start feeling confident again,” he said.

Long-term unemployed still hard hit

The plight of the long-term unemployed (those jobless for 27 weeks or more) was little changed. There were 5.51m people in this category in January, down from 5.58m in December. They accounted for 42.9% of the unemployed in January and have represented more than 42% of the number for over a year.

Earlier this week the Pew Charitable Trust released a report on the long-term unemployed that found a third of unemployed people had been unemployed for a year or more. The report also highlighted the plight of older workers. In the fourth quarter
of 2011, more than 42% of unemployed workers older than 55
had been out of work for at least a year, a higher percentage than any other age category.

Paul Ashworth, chief US economist at Capital Economics, compare the number of unemployed to the whole US population, not just those potentially in the labour market, and found the ratio is still flat. This suggests there are a lot of people still out there who have given up looking for work and have fallen off the tables.

There’s a stark racial divide

The Labour Department still show sharp racial disparities in unemployment rates. In January 2012 the unemployment rate for white men over the age of 20 was 6.9%. For black men it was 12.7.

Young people are still suffering, and again black youth is suffering more. Overall the unemployment rate for teenagers was 23.2%. The unemployment rate for white men and women between the ages of 16-19 was 21.1% in January, for blacks it was 38.5%.

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