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Jobs report finds little overall progress. Why is recovery so slow?

Jobs report says the unemployment rate was 7.8 percent in December – the same as for November. Employment growth is notably slower than in past recoveries from recession.

By Staff writer / January 4, 2013

In this July 2012 file photo, people looking for work attend a job fair in San Jose, Calif. The US unemployment rate held steady at 7.8 percent in December – the same as for November.

Paul Sakuma/AP

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The US unemployment rate held steady at 7.8 percent in December, with the good news being that the job market didn't stumble because of high-stakes brinkmanship in Washington over taxes.

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For now, the job market has dodged the "fiscal cliff," but employment growth is also notably slower than in past recoveries from recession.

The economy added 155,000 jobs in December, the Labor Department said Friday as it reported the results of its monthly survey of employers. A separate survey of US households found the unemployment rate unchanged, as tepid job growth was more than matched by the entry of new people into the labor force to look for work. The jobless rate for November, which had been initially reported as 7.7 percent, was revised up to 7.8 percent.

"Some of the uncertainties in the economy have been removed with the fiscal cliff agreement [on tax rates for 2013], but Congress failed to address the debt and deficit issues which will still be a drag on the economy," said Chad Moutray, chief economist at the National Association of Manufacturers, in a written analysis of the labor report.

Manufacturing was one of the bright spots in the monthly numbers, showing a gain of 25,000 hires on employer payrolls.

But overall, the key phrases in the Labor Department's description of the job market were "essentially unchanged" and "little changed." The stock market reacted in kind, with the Standard & Poor's 500 index essentially flat Friday morning after the news.

Why has the jobs recovery since the recession, which officially ended in 2009, been so slow?

Before looking at some answers, here's the evidence on how the current job market compares with that in past recoveries.

The current pace of recovery is weaker than in the other recoveries since 1948, with the possible exception of the period after the economic slump of 2001.

Prior to 1990, economic recoveries tended to show a fairly quick rebound in jobs, with total US employment rising 4 percent or more within about 15 months. The past couple of decades have been a period of "jobless recoveries," where the progress tends to be slower. The graphic attached to this article (see box near the upper-left part of the story) tells the story visually.

A quick note about the chart: The version shown here omits the 1980 recession for more visual simplicity, since the aftermath includes another recession and recovery. You can visit the original interactive version of the chart at the Federal Reserve Bank of Minneapolis.

After the 1990 recession, it took three years for the economy to create 4 percent more jobs. After the recessions that began in 2001 and 2007, it's been even more challenging.

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