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The Numbers: Unemployment Rate Falls, but Fiscal Cliff Looms

CHICAGO — THE UNEMPLOYMENT RATE for November fell to 7.7%, according to the Bureau of Labor Statistics, marking its lowest point since February 2009. Unemployment has slowly but steadily declined during 2012, which began with the unemployment rate at 8.3%. Approximately 146,000 new jobs were added to the economy in November.

Meanwhile, uncertainty over the federal budget and the so-called “fiscal cliff” colored many economic factors during the last two months of 2012.

ACCORDING TO THE BEIGE BOOK, seven of the 12 Federal Reserve Districts noted modest growth before the middle of November. Two districts—St. Louis and Minneapolis—reported a stronger increase in economic activity, while Boston indicated a slower rate. The New York district’s figures were disrupted in late October and through November by Hurricane Sandy, and Philadelphia’s figures were somewhat affected by the storm.

THE FEDERAL OPEN MARKET COMMITTEE in late October issued a report after its September meeting, suggesting economic activity was expanding at a moderate pace. Employment growth was slow, and unemployment figures remain high. Household spending advanced a bit more quickly than forecast, while business investments slowed, and the housing industry has shown signs of improvement.

NEW FORECLOSURES WERE UP from September to October, according to RealtyTrac, with a 3.34% increase to 186,455. New listings increased only slightly, up 0.82% from September to October, while the number of homes sold from August to September dropped 5.28% to a total of 265,926.

The Mortgage Bankers Association’s weekly survey for the last week of November showed an increase of 4.5% in the mortgage applications from the previous week. The refinance share of the activity showed an increase of 2% from the previous week, going from 81% to 83%.

THE NON-MANUFACTURING SECTOR showed growth for the 35th consecutive month in November, according to the Institute for Supply Management’s Report on Business. Anthony Nieves, chair of the Institute for Supply Management Non-Manufacturing Business Survey Committee, said, “The NMI registered 54.7% in November, 0.5 percentage point higher than the 54.2% registered in October.”

CONSUMER CONFIDENCE WAS LARGELY UNCHANGED. Many consumers, when asked by the Survey of Consumers, were dissatisfied with possible changes in the federal tax and spending programs and the inability of the political system to reach a settlement.

“The gains in confidence ended in late November as consumers became more uncertain about when and how the fiscal cliff will be bridged,” says Richard Curtin, Surveys of Consumers chief economist. “While they had anticipated a last-minute settlement, some consumers are beginning to doubt whether that will happen before higher tax rates take effect in January. While a resolution just before year-end could reverse any future spending declines, it would nonetheless diminish holiday spending.”


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