PRINCETON, NJ -- Job creation by the U.S. federal government fell further into negative territory in December 2011 with Gallup's Job Creation Index at -20, worsening from -15 in November and from -12 in October. While 23% of federal employees in December said their area was hiring, 43% said employees were being let go -- by far the most negative conditions Gallup has found since it began tracking federal government job creation in August 2008.

Gallup measures job creation by asking those who are employed whether their companies are hiring workers and expanding the size of their labor forces, not changing the size of their workforces, or laying off workers and reducing their workforces. Gallup's Job Creation Index is based on the net difference between the percentage who say their employer is hiring and those who say their employer is letting workers go.

Employees' negative views of job creation in the federal government represent a sharp change from previous years. Despite the recession and financial crisis of 2008-2009, federal government workers were reporting more hiring than firing until early 2011. Federal job creation fell to the single digits in January and has been generally negative since then, with more workers reporting firing than hiring since June.

State and Local Government Job Creation Declines Moderating

State and local government job creation also declined in December, with the state index at -5 and the local index at -4. State job creation began declining in December 2008 and local government job creation began its decline the following month. State and local governments have been shrinking their workforces since that point with the declines peaking in April 2010. At the end of each of the past two years, state and local workers have reported a modest improvement but still negative job creation.

State and local government job creation has been negative during recent years, even as the federal government and the private sector were producing new jobs. In late 2011, the job situation appears to have moderated at the state and local level, while the federal job situation continued to deteriorate.

Private-Sector Job Creation Shows Little Change

Nongovernment job creation was at +18 in December -- not much different from the prior two months and most of 2011. Private-sector job creation turned negative in December 2008 and remained that way through July 2009. Since that point, job creation has improved slowly and has been in the +16 to +20 range since February 2011.

Implications

Gallup's Job Creation Index shows major shifts in the hiring and firing patterns across federal, state, and local governments since 2008. Initially, in 2008, 2009, and 2010, the federal government was largely insulated from the job losses the private nongovernment sector and state and local governments were experiencing since the recession and financial crisis. That all changed in the past three months when federal government employees began to report lower job creation at their places of employment, while the picture moderated with less losses at state and local governments, and remained positive and stable for private-sector workers. Concerns about the rapidly expanding federal budget deficit may have begun to reverse the hiring in the federal government that went on after 9/11, particularly as the 2012 elections approach.

On a more positive note, the moderation of state and local government job losses may mean that these government entities are finally reaching a new equilibrium. That is, state and local government revenues may now be stabilizing at more sustainable levels. Whether this is the case is yet to be seen as state and local budgets are rolled out in 2012.

The best news may be about private-sector job creation. The current level of job creation tends to reinforce the idea that the private sector continues to produce jobs at a consistently moderate pace. Private-sector job creation is the key to overall economic growth. Private-sector job creation is also essential if those leaving government jobs at all levels are going to find new nongovernment employment opportunities.

Gallup.com reports results from these indexes in daily, weekly, and monthly averages and in Gallup.com stories. Complete trend data are always available to view and export in the following charts:

Daily: Employment, Economic Confidence and Job Creation, Consumer Spending

Weekly: Employment, Economic Confidence, Job Creation, Consumer Spending

Read more about Gallup's economic measures.

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