Oooops! US economy adds an anemic 74,000 jobs in December

This is a "wow" number. Projections for the number of jobs created in December topped 220,000 in some pre-BLS release surveys. Just 2 days ago, ADP predicted a gain of 238,000 jobs for the month.

Just 74,000 jobs were created in December - the smallest increase in 3 years. The "official" unemployment rate fell from 7% to 6.7%. But that's because fewer Americans were even bothering to look for jobs. The labor participation rate dropped from 63% to 62.8% - in one month.

The surprising low payroll figures had some analysts predicting the number of jobs added in December will be revised upward in the coming month.

"I wouldn't pay any attention at all to these numbers. They're not consistent with anything," Moody's Analytics Chief Economist Mark Zandi said on CNBC. "We're going to get the benchmark revisions, and they're going to be all revised up and revised away."

The report contained better news for previous months. The Labor Department revised the jobs number for November up by 38,000 to 241,000. Its calculation for how many jobs were added in October remains 200,000.

Friday's jobs report arrives as Congress is engaged in a contentious debate over extending benefits for the long-term unemployed, which expired Dec. 28. Senate Democrats and Republicans are at an impasse over how long to extend the benefits as well as how to offset the cost.

"I have been waiting here for more than 24 hours for a reasonable proposal by my Republican friends to pay for this," Senate Majority Leader Harry Reid (D-Nev.) said on Thursday. "We don't have one yet."

The fight over jobless benefits underscores the degree to which unemployment remains a problem for the economy and a source of political tension, even as the economy has shown signs it is beginning to more quickly gain strength.

The jobs report is also being closely watched by the Federal Reserve, which this month began slowly scaling back its "quantitative easing" economic stimulus program.

Citing improvements in the job market and a declining unemployment rate, the Fed's policy setting committee announced in December that it would reduce it's monthly bond buys - which are intended to keep long-term interest rates low - from $85 billion to $75 billion.

Analysts expect the Fed to continue to announce a $10-billion reduction at each of its meetings in 2014 - unless economic conditions pick up or worsen dramatically.

Deutsche Bank's senior economist Carl Riccadonna said in an interview before the jobs data was released on Friday that if the number of jobs added comes in far lower than expectations in December, the Fed may not be comfortable announcing an additional $10 billion cut from its asset purchases at the January meeting of its Federal Open Market Committee.

I am not one of those who believes the BLS data can be cooked - at least not easily. And certainly not by 100,000 + jobs. But I find it interesting that in the midst of a debate over the extension of unemployment benefits that such a poor jobs report would emerge.

Having said that, the upward revision for November by 38,000 jobs probably means a similar increase next month for December's numbers. But even a strong revision can't hide the fact that job creation in America is barely keeping up with new job seekers entering the workforce every month. And the number of discouraged workers continues to rise.

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