CHICAGO – The U.S. economy created 157,000 new jobs in December, an underwhelming performance that continued a tepid upward trend – but which also provided additional evidence that the nation’s employers remain reluctant to hire additional workers.

The disappointing December jobs report indicates that “the recovery of the labor market from the recession is still incomplete,” said economist Sophia Koropeckyj of consulting firm Economy.com.

The job market’s protracted weakness became a highly charged issue during the 2004 presidential campaign, and Democratic critics scored heavily from forecasts that indicated Bush would become the first U.S. president since Herbert Hoover to preside over a net decline in U.S. jobs over the course of a four-year term.

However, figures released by the Bureau of Labor Statistics Friday suggest that the Bush administration will avoid – barely – that embarrassment.

Over the 47 months since Bush was sworn in, the United States has lost a net 122,000 jobs. With payrolls currently increasing at an average of about 175,000 per month, it appears likely that the first Bush administration will end its 48-month tenure with a tiny, less-than-100,000 increase in the number of U.S. jobs.

While the number of jobs stayed essentially flat during those four years, however, the nation’s population increased by about 11.8 million.

A period of white-hot economic growth in the 1990s drove the nation’s unemployment rate as low as 3.9 percent in late 2000, but the subsequent recession erased nearly three million jobs and drove unemployment to a peak of 6.3 percent in mid-2003.

Since then, the nation’s jobless rate has eased downward, but at a frustratingly slow rate. And the latest employment report offered little hope for faster improvement.

During the year just ended, the BLS said, U.S. employers added 2.2 million additional workers, raising the number of Americans with jobs to 132.3 million. The 2004 gain marks the biggest full-year increase since 1999, the bureau noted, and it was in stark contrast to the three consecutive years of job declines that ended in 2003.

Secretary of Labor Elaine Chao said the latest report “emphasizes the importance of the president’s economic programs and job training initiatives.”

A number of economists pointed out, however, that the increase is less impressive than it sounds, because the U.S. economy needs to add more than 100,000 jobs monthly just to keep up with population growth.

“While last year’s pace of job creation was sufficient to absorb new entrants into the labor market,” noted Economy.com’s Koropeckyj, “it has been insufficient to bring many previously displaced workers back into the fold again.”

Indeed, the nation’s unemployment rate in December remained stubbornly unchanged at 5.4 percent for a fifth consecutive month in December. That means that even though the U.S. economy will record a robust growth of about 4.0 percent, the nation’s unemployment rate inched down only 0.3 percentage points during the year, from 5.7 percent at year-end 2003.

Employment growth remains “fairly subdued,” observed Leo Kamp, economist with TIAA-CREF Investment Management, “especially considering that we are now more than three years into an economic expansion.”

The best growth may have already occurred. Jobs grew at an average 204,000 per month in the first half of 2004, but the rate of increase slowed markedly in the year’s second half, to about 168,000.

Wall Street scrutinizes the monthly jobs report because investors know Federal Reserve Chairman Alan Greenspan considers the data a key barometer of inflationary pressures. From that stock-market perspective, December’s lackluster job growth is good news, because stronger growth might spur Fed inflation-fighters to accelerate their current go-slow program of small, incremental interest-rate hikes.

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(c) 2005, Chicago Tribune.

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Distributed by Knight Ridder/Tribune Information Services.

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GRAPHIC (from KRT Graphics, 202-383-6064): Unemployment

AP-NY-01-07-05 1957EST

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