The December jobs report was a downer for the U.S. economy and for anyone looking for work. Government statistics reported Friday showed only 74,000 jobs were created that month, well below expectations. Although the unemployment rate dropped to 6.7 percent, from 7 percent, that was largely due to people dropping out of the work force.
Barry James, president of James Investment Research, was one of the few forecasters expecting disappointing employment numbers, even as the U.S. economy shows strength in sectors like housing and manufacturing.
"We're not where we should be in a normal recovery" as far as jobs go, James said, noting that most of the jobs created since the Great Recession ended in mid-2009 have been low-wage positions that offer workers little security. "We'll
see some improvements, but the labor market won't be as dynamic as we'd
like to see."
James does think the labor market, which picked up speed late last year after growing unevenly in 2013, will firm up in 2014. "There will be a few of reports that aren't very good, but overall we'll see a steady improvement throughout the year," predicted James, whose firm operates the James Advantage Funds.
James highlighted three bright spots for the economy that could boost growth and energize the job market:
Housing: Improvements in the housing market should lead to new jobs, he said. As the inventory of existing homes for sale declines, new homes will be needed. A buoyant housing sector also typically benefits the construction industry, while a rebound in residential real estate prices can foster consumer spending by boosting the wealth of homeowners.
Energy: James points out that the U.S. now produces enough energy to satisfy about 80 percent of its needs. "With all that additional production comes a lot of new jobs," he said, especially for oil servicing and refiners.
Cars: U.S. auto manufacturers have come back strong since the depths of the financial crisis, when industry giants GM and Chrysler required bailouts. That could drive job-creation as car makers pick up production to meet growing demand. "We don't have enough skilled people in those areas," James said. "People looking for work, if they can get those skills, they can probably find a good job."
Another positive for the labor market is the new Federal Reserve Chair, Janet Yellen, James said. "Her focus is going to be jobs, jobs and jobs." he said, while noting that such an approach to monetary policy could trigger inflation and carries other risks.
If the employment picture starts to weaken, James believes the Fed will do what it can to stimulate the economy. "She is not going to take her eye off that prize."