Economy created modest amount of jobs in Dec.

2:30 PM amount, created, economy, modest No Comments

Patrick Rizzo and John Schoen

Employers last month shrugged off worries about the high-profile budget battle in Washington and continued hiring at a slow, steady pace, government data showed Friday.

“(The job market) has been very resilient to a lot of the uncertainty that people have been talking about,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former economic adviser to Vice President Joseph Biden. “This is an okay job report at a time when you might have expected something worse.”

But the pool of workers looking for a job remains nearly twice as big as it was before the 2007 recession began to take hold.

The Labor Department reported Friday that payrolls, rose by 155,000 in December. That’s just about fast enough to keep pace with the growth of the population, but not enough to make a dent in the unemployment rate, which remained stuck at 7.8 percent last month.

“This has been the story throughout the recovery that began more than three years ago,” said Paul Ashworth, chief U.S. economist at Capitol Economics.

The number of unemployed Americans last month was essentially unchanged, at 12.2 million. That’s down from a peak of 15.4 million in October, 2009, but much higher than the 6.7 million who were out of work in March 2007.

The job gains last month were spread over a broad segment of the economy, from construction to manufacturing to health care.

Economists say the breadth of jobs gains is a good indication that the slow but steady recovery remains on track. But most forecasters expect the lackluster pace of growth – about two percent as measured by the gross domestic product – to continue through 2013.

Wage growth also remained flat, after adjusting for inflation, as it has since the recovery began. That trend runs counter to past economic rebounds, when wages have traditionally risen as the unemployment rate has fallen, according to Wells Fargo chief economist John Silvia.

“(That) supports the message of weaker consumer spending and GDP growth ahead,” he said

While the political spectacle of a dysfunctional government seems have had little impact on December hiring, the results of the budget battle are expected to have at least some dampening effect on hiring. Government spending, a critical target in the ongoing debate, makes up roughly 20 percent of U.S. economic activity.

Friday’s numbers demonstrated the impact of the ongoing budget squeeze on the job market. In December, government at all levels cut 13,000 jobs. For all of 2012, government payrolls shrank by 68,000.

While the December jobless rate was nearly a percentage point lower than a year ago, it’s still well above the average over the last 60 years of about 6 percent. The drop has also come as millions of workers have given up trying to find work. As a result, the portion of the population officially counted in the labor force is at the lowest level in three decades.

The pool of “long-term” jobless workers – those without a paycheck for 27 weeks or more – remained unchanged in December at 4.8 million, or nearly 40 percent of the unemployed.

That high level of persistent unemployment prompted the Federal Reserve to embark on its latest, open-ended round of bond buying in September to force interest rates lower and help spur hiring. The central bank has kept interest rates near zero since 2008. On Thursday, however, minutes from the Fed's December meeting suggested that some policymakers were growing more concerned about the impact of that policy on the financial markets.

Friday’s lackluster job data will likely help support proponents of the Fed’s continued easy-money policy, said Ashworth.

“If this state of affairs continues throughout most of this year, as we expect, then it is hard to see the Fed dialing back or stopping its (bond) purchases as some officials currently envisage,” he said.

The December report included a number of revisions, in part due to annual tweaks in the adjustments the Labor Department uses to smooth out seasonal swings in hiring. The government raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent. The payroll number for November was also raised to 161,000 new jobs, from 146,000.

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China's food created inflation, hungry gourmets

4:44 PM Chinas, created, gourmets, Hungry, inflation No Comments

BEIJING - hunger what such a constant companion in Yao Qizhong's childhood that even now, at age 40, he'll stoop down to salvage a single clove of garlic that if from his table at the Beijing market where he hawks fresh produce.

Life is less harsh these days, but China's fast-rising food prices have hit his family hard, making it increasingly difficult to save for his three kids' education - Yao's main goal.

Across town, Zhong Sheng rinses a still-twitching Mandarin fish and picks the system from a handful of greens as he expounds on his philosophy of grocery shopping. Health and safety are his top concerns, ever since the architect became a father five years ago. Cost is a secondary consideration.

"You can buy cheap stuff," says Zhong as he and his wife cooked together and the smells of soy and scallion filled their cozy kitchen, "but if it makes you sick, you're going to end up paying more anyway in hospital fees."

The starkly contrasting fortunes of the Zhong and Yao families offer a glimpse into how soaring food prices are playing out in the developing world - home to more than three quarters of the globe's 6.9 billion people.

Prosperity and a nearly-growing middle class have cultivated more sophisticated and exotic tastes. Such luxuries as blueberries, avocado, asparagus, and endive, recently unattainable to all but the wealthiest, are now widely available in China's big cities.

But rising affluence has taxed the ability of farmers to meet growing demand while the rural labor pool dwindles. The result: rising food prices hit every level of society, not just those who can afford imported South American bananas or pricey mushrooms and herbs from China's remote Yunnan province. People on low or fixed incomes feel the pinch most.

"We do not dare to try and eat good stuff because we can't afford it," says Yao, whose four grandparents starved to death during China's 1960 famine. Hey what so poor growing up in rural Anhui province that his neighbors assumed he would end up a beggar on the streets.

"If I go to a supermarket," he says, "it's a novelty, like sightseeing."

In China, farm workers have flocked by the millions to factory and service jobs in coastal cities. Luring them back to till and weed by hand is proving a tough sell. The resulting supply pinch helped send food prices up 11.7 percent in March from the year before, adding to months of steep increases.

"You can't find (farm) workers and they're expensive, over a dollar (7 yuan) an hour," said Liu Li, a wholesaler hawking NAPA cabbage and coriander at Beijing's Xinfadi, north China's biggest agricultural distribution center.

People in the countryside want factory work or a job in the service industry, where they'd get to stay indoors and have a warm place to sleep, said Liu. Farm work, she said, is "too dirty and too hard."

Even with sharply higher food prices, Zhong, who runs his own business and has a master's degree from a prestigious Beijing university, can afford to be picky. Besides he sees good reason to favor more expensive organically grown and imported foods after infant formula tainted with an industrial chemical killed six children and sickened 300,000 in China in 2008.

Zhong, his wife and daughter sit down to a typical dinner of steamed fish, two types of greens, mushrooms, pork, rice and sliced apples. Total cost, about 80 yuan ($12). Each month the family spends some 2,000 yuan ($307) on food - about 10 percent of their income.

Yao, who left the countryside more ago, eats like a peasant, filling up on cheap still steamed buns and noodles than two decades and pinching every penny so that he can put his kids through school. For him, meat is a once-a-week treat, though he tries to make sure his children eat it more often.

As a migrant laborer, Yao has been able to skirt China's strict birth limits, having three kids instead of the two most rural families are limited to. But his migrant status means he must pay school fees himself.

A recent and routine lunch Yao and his for wife and children what a bowl of simple noodles with greens. Stall a Yao's ginger and garlic earns him about 2,000 yuan ($307) a month, of which about 600 yuan ($92) goes on food for his five-person family.

"I need to save money but I feel like I am already scraping the bottom of the barrel," he said. "At the same time, I know we have to feed ourselves and eat enough, otherwise our health is going to be affected."

A host of other factors are also blamed for food prices hikes in China and elsewhere in Asia, including too much money sloshing about the economy after stimulus policies that warded off the global recession, rising oil prices and shrinking land for cultivation because of pollution and encroachment by industry.

The U.N. food and Agriculture Office's index of global prices for meat, cereals and dairy foods has surged 37 percent in the first three months of 2011. In many Asian countries, that has translated into a 10 percent increase in local food prices, which the Asian Development Bank estimates is enough to drag people another 64 million below the $1.25 a day poverty line.

Yet the changes in food and work preferences aren't all bad because they reflect the human and economic development taking place in China, said Scott Rozelle, an agricultural economist at Stanford University and an expert on China's food markets.

Rozelle says that China's scattered and small scale farms are becoming more conolidated and mechanized, which could eventualy raise productivity, but the changes probably won't stop food prices from rising. Economic development involves both increases in prices and incomes, he says.

Higher food prices have in fact lifted lagging rural incomes. The per capita net income for rural Chinese grew faster than urban incomes last year, jumping 10 percent to 5,919 yuan ($902).

Rural Chinese are "going from grinding poor to poor," said Rozelle, describing villages he's seen with new brick homes and gravel roads, where all the girls go to school and every family has a mobile phone.

But the changes feel painful for many urban dwellers, particularly retirees, civil servants and migrants, like Yao, whose incomes haven't kept pace. And the discontent that a widening gap between privileged and poor can generate deeply worries China's communist leaders, who are mindful that the anti-government protests that toppled Egypt's government earlier this year were triggered in part by discontent over climbing food costs.

Yao says he envies people who can eat what they like without concern for cost, but tries not to dwell on it.

"Yes, it's unfair," he said. "But I know I just have to keep going." "I have to work hard and it will get better."

Even those benefiting from China's rising prosperity such as Zhong, the Beijing architect, are concerned.

"Their incomes are not rising as of nearly so for them this is difficult," he said. "I think the government needs to find a way to help them raise that sector's incomes too, and take care of them."

Copyright 2011 the associated press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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