The U.S. economy added 1.6 million jobs over the last year, a figure that is dwarfed by the nation's 13.3 million unemployed and an additional 6.6 million people who are not in the labor force, despite still wanting jobs. At 1.6 million, jobs are being created at an average of 130,000 a month, barely enough to keep up with population growth. Will the country make any headway in 2012? Here are 5 things to expect from the U.S. job market in the next 12 months.
No Help from Congress
There is at least one year left of a divided Congress, with Republicans seemingly dead set on stopping President Obama's initiatives at every turn. Though the two parties disagree on exactly which measures might create jobs, they are less likely than ever in recent history to pass those measures. As the Washington Post has noted, the House and Senate have passed very few bills this year.
More Slow Growth
The good news is that the job market will continue to see improvement in 2012, much like it saw in 2011. The bad news is that job growth in 2011 was moderate, at best. According to Michael Montgomery, senior economist at IHS Global Insight, things will continue to get better, but not fast enough to see immediate, on-the-ground changes.
"The next 12 months are not going to be distinguishable from the last 12 months in terms of job gains," says Montgomery. "Jobs are up 1.6 million from what they were a year ago, and our calculation of the next year is 1.7 million, so...no one in the real world is going to see the difference between 1.6 million and 1.7 million."
Likewise, Jim Rickards, senior managing director of Tangent Capital and author of Currency Wars, sees middling job growth. "I don't see [the unemployment rate] below 8 percent, but i don't see it up sharply in 2012," says Rickards.
Healthcare, Manufacturing Still Robust
Though it's discouraging to see predictions for continued slow growth, those industries that are currently doing well will likely continue to strengthen. One is healthcare, which has seen steady upward growth in strong and weak years alike. According to Montgomery, healthcare employment will continue to grow in 2012, possibly even more rapidly than it did in 2011, as the population continues to age and require more medical attention. According to Labor Department figures, from November 2010 to November 2011, healthcare and social assistance added 346,000 jobs, accounting for more than one-fifth of total U.S. job growth. Manufacturing has also been picking up steam. After a decades-long decline, the sector added around 200,000 jobs in the last year. Montgomery sees similar growth this year in manufacturing.
Stabilization in Local Governments
"One place where there's a semi-bright spot is that the state and local governments, which have been a major drag over the last year," says Montgomery. Having made substantial cuts—618,000 jobs since the start of 2009—those governments have learned to do more with fewer workers. The public sector, says Montgomery, will therefore "still be a drag, but far less of a drag" in 2012.
Of course, may of those state- and local-level government jobs are still in jeopardy because of the continued weakness in housing. In his outlook for 2012, Mark Zandi, chief economist at Moody's Analytics, wrote, "Falling house prices also undermine property taxes, forcing local government to cut jobs and other spending. Big cuts in municipal budgets could cut growth more than anticipated." And as property assessments only happen periodically, the effects of this housing weakness will certainly last for years to come, no matter what happens to the housing market.
Relief for New Graduates
Employers plan to hire 9.5 percent more members of the class of 2012 than from the class of 2011, according to a survey released in October by the National Association of Colleges and Employers. The planned hires are welcome news for America's younger generation, on whom unemployment has taken an historic toll: Census Bureau figures this year showed that just 55.3 percent of Americans aged 16 to 29 were employed in 2012—the lowest share since World War II.