Latest job numbers signal economic recovery
(CBS News) It took nearly five years, but the Dow is back above 14,000 -- a symbolic end to the worst economic crisis since the Great Depression.
In October 2007, the Dow hit an all-time high of 14,164. Then the bottom fell out. By March 2009, that key measure of America's economic health had fallen to 6,547.
On Friday, the Dow gained 149 points to close at 14,009. The market was giving a thumbs up to the latest jobs report while unemployment ticked up a tenth of a point to 7.9 percent. A separate survey of employers shows they added 157,000 new jobs. But is the stock market's big gain a sign of economic health or a Wall Street fever?
Super Bowl souvenirs are rolling off the line in a hurry at WinCraft, the sports collectibles company in Winona, Minnesota. Super Bowl Sunday is big business there. President John Killen said the company just had a strong sales year.
"It actually grew our employment base to about 550 people, up from about 500," he said. "There's been sales jobs, accounting jobs, engineering jobs. So it's a wide variety, it hasn't been just one area."
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Killen said business this weekend sets the tone for the rest of the year, and he likes what he sees. "WinCraft's a lot more optimistic about 2013," he said.
Nationally, hiring showed steady growth in January "It's not an exciting report," said economist Ellen Zentner of Nomura Securities. "It's a respectable report."
She said there was strength in construction, manufacturing and retail hiring. The Labor Department also said the economy added 422,000 more jobs last year than first reported. That upped the average monthly job growth in 2012 from 153,000 to 181,000.
But the economy is facing new headwinds with the payroll tax rising again from 4.2 percent to 6.2 percent. So how much impact will payroll tax have on growth? "Consumers are faced with a drop in real disposable income of more than two percent in the first quarter," said Zentner. "That's gonna impact spending. That's gonna shave at least a percentage point off of GDP growth."
And slower growth means less hiring. But many economists believe that will only be a temporary setback to the economy while people adjust.
As for whether a dent has been made in long-tern unemployment, there are still 4.7 million people out there who are out of work more than six months. But this is encouraging: The average length a person is unemployed has dropped to 35.3 weeks, and that is now the lowest in more than two years.
