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The Labor Department says the U.S. economy gained 103,000 jobs in December and the unemployment rate fell to 9.4 percent from 9.8. It might sound like good news, but many economists hoped to see much stronger job growth. NPR's Chris Arnold reports.
CHRIS ARNOLD: To make the most of the increase in jobs, President Obama yesterday held a news conference at a window factory in Landover, Maryland. It's been hiring on workers. The president spoke after going on a tour of the business, Thompson Creek Manufacturing.
President BARACK OBAMA: Thompson Creek was able to grow its work force from 200 employees to nearly 300 employees in just one year.
ARNOLD: The president said that his administration has been enacting policies to try to promote job growth, such as tax credits for businesses that hire workers.
President. OBAMA: We also passed a tax credit for products like energy-saving windows, and that led to a 55 percent boost in the sales at this firm.
ARNOLD: Looking back over the past year at hiring around the country, the president was upbeat.
President. OBAMA: The trend is clear. We saw 12 straight months of private sector job growth. That's the first time that's been true since 2006. The economy added 1.3 million jobs last year. And each quarter was stronger than the previous quarter, which means that the pace of hiring is beginning to pick up.
ARNOLD: Still, a snail moves faster when it comes out of its shell and starts oozing forward, and the jobs growth picture hasn't been improving much more quickly than that.
Mr. NARIMAN BEHRAVESH (Chief Economist, IHS Global Insight): Improving but not great.
ARNOLD: Nariman Behravesh is chief economist IHS Global Insight. He was not too excited by the 103,000 jobs that the economy gained in December.
Mr. BEHRAVESH: This number was a little disappointing 'cause we and a lot of other people expected it to be closer to 200,000. But the good news is businesses are feeling more optimistic. All the surveys of business sentiment(ph) suggested that businesses are feeling better about things. They are going to hire, but it certainly looks like they're still hiring at a fairly slow pace.
ARNOLD: The problem is that the economy needs to add around 150,000 jobs every month just to keep pace with population growth and people coming back into the workforce. And while we may have gained a million jobs last year, as the president said, the country lost nearly eight and a half million jobs the two years prior. So that level of job growth is...
Mr. BEN BERNANKE (Chairman, Federal Reserve): A pace insufficient to materially reduce the unemployment rate.
ARNOLD: Federal Reserve Chairman Ben Bernanke spoke about this at a hearing in D.C. on Friday. His comments seemed to throw some cold water on the optimism being expressed by the Obama administration. He said the members of the Federal Open Market Committee are estimating just how long it will take for most out-of-work Americans to get back to work.
Mr. BERNANKE: Most participants expected the unemployment rate to be close to eight percent two years from now. At this rate of improvement, it could take four to five more years for the job market to normalize fully.
ARNOLD: That's a pretty disheartening prediction. Michael Linden is an economist with the liberal-leaning think tank the Center for American Progress.
Mr. MICHAEL LINDEN (Economist, Center for American Progress): So this actually speaks to the ludicrous-ness - that's not really a word - the craziness of laying anybody off on the public side right now.
ARNOLD: Most economists agree that the country needs a credible plan to reduce the federal deficit, and that will likely mean cutbacks in government spending. But in the short term, some economists are calling for even more spending to prop up local and state governments so that they don't have to lay off more people and make the unemployment problem even worse.
Chris Arnold, NPR News.