FDA: New rules will make food safer


WASHINGTON (AP) — The Food and Drug Administration says its new guidelines would make the food Americans eat safer and help prevent the kinds of foodborne disease outbreaks that sicken or kill thousands of consumers each year.


The rules, the most sweeping food safety guidelines in decades, would require farmers to take new precautions against contamination, to include making sure workers' hands are washed, irrigation water is clean, and that animals stay out of fields. Food manufacturers will have to submit food safety plans to the government to show they are keeping their operations clean.


The long-overdue regulations could cost businesses close to half a billion dollars a year to implement, but are expected to reduce the estimated 3,000 deaths a year from foodborne illness. The new guidelines were announced Friday.


Just since last summer, outbreaks of listeria in cheese and salmonella in peanut butter, mangoes and cantaloupe have been linked to more than 400 illnesses and as many as seven deaths, according to the federal Centers for Disease Control and Prevention. The actual number of those sickened is likely much higher.


Many responsible food companies and farmers are already following the steps that the FDA would now require them to take. But officials say the requirements could have saved lives and prevented illnesses in several of the large-scale outbreaks that have hit the country in recent years.


In a 2011 outbreak of listeria in cantaloupe that claimed 33 lives, for example, FDA inspectors found pools of dirty water on the floor and old, dirty processing equipment at Jensen Farms in Colorado where the cantaloupes were grown. In a peanut butter outbreak this year linked to 42 salmonella illnesses, inspectors found samples of salmonella throughout Sunland Inc.'s peanut processing plant in New Mexico and multiple obvious safety problems, such as birds flying over uncovered trailers of peanuts and employees not washing their hands.


Under the new rules, companies would have to lay out plans for preventing those sorts of problems, monitor their own progress and explain to the FDA how they would correct them.


"The rules go very directly to preventing the types of outbreaks we have seen," said Michael Taylor, FDA's deputy commissioner for foods.


The FDA estimates the new rules could prevent almost 2 million illnesses annually, but it could be several years before the rules are actually preventing outbreaks. Taylor said it could take the agency another year to craft the rules after a four-month comment period, and farms would have at least two years to comply — meaning the farm rules are at least three years away from taking effect. Smaller farms would have even longer to comply.


The new rules, which come exactly two years to the day President Barack Obama's signed food safety legislation passed by Congress, were already delayed. The 2011 law required the agency to propose a first installment of the rules a year ago, but the Obama administration held them until after the election. Food safety advocates sued the administration to win their release.


The produce rule would mark the first time the FDA has had real authority to regulate food on farms. In an effort to stave off protests from farmers, the farm rules are tailored to apply only to certain fruits and vegetables that pose the greatest risk, like berries, melons, leafy greens and other foods that are usually eaten raw. A farm that produces green beans that will be canned and cooked, for example, would not be regulated.


Such flexibility, along with the growing realization that outbreaks are bad for business, has brought the produce industry and much of the rest of the food industry on board as Congress and FDA has worked to make food safer.


In a statement Friday, Pamela Bailey, president of the Grocery Manufacturers Association, which represents the country's biggest food companies, said the food safety law "can serve as a role model for what can be achieved when the private and public sectors work together to achieve a common goal."


The new rules could cost large farms $30,000 a year, according to the FDA. The agency did not break down the costs for individual processing plants, but said the rules could cost manufacturers up to $475 million annually.


FDA Commissioner Margaret Hamburg said the success of the rules will also depend on how much money Congress gives the chronically underfunded agency to put them in place. "Resources remain an ongoing concern," she said.


The farm and manufacturing rules are only one part of the food safety law. The bill also authorized more surprise inspections by the FDA and gave the agency additional powers to shut down food facilities. In addition, the law required stricter standards on imported foods. The agency said it will soon propose other overdue rules to ensure that importers verify overseas food is safe and to improve food safety audits overseas.


Food safety advocates frustrated over the last year as the rules stalled praised the proposed action.


"The new law should transform the FDA from an agency that tracks down outbreaks after the fact, to an agency focused on preventing food contamination in the first place," said Caroline Smith DeWaal of the Center for Science in the Public Interest.


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Missoni scion on small plane missing in Venezuela


ROME (AP) — Rescue crews used boats and aircraft on Saturday to search for a small plane that disappeared in Venezuela carrying the CEO of Italy's iconic Missoni fashion house and five other people.


But 24 hours after the BN-2 Islander aircraft disappeared from radar screens on its short flight from Venzuela's coastal resort island of Los Roques, no sign of the plane had been found, officials said.


"We have no other news" about the plane carrying Vittorio Missoni, the head of the company; his wife, Maurizia Castiglioni; two of their Italian friends; and two Venezuelan crew members, said Paolo Marchetti, a Missoni SpA official. He spoke briefly to reporters as he left company headquarters in the northern Italian town of Sumirago Saturday afternoon.


Missoni's younger brother, Luca, who is active in the family-run business, was reportedly traveling to Venezuela on Saturday to monitor search efforts.


The La Repubbica.it, website of the Rome newspaper said Venezuelan aircraft, motorboats and helicopters took off at dawn Saturday to resume the search for the missing plane, which had been suspended on Friday night. The Italian news agency ANSA, reporting from Rome, said a specialized ocean-searching naval vessel also was being deployed.


Vittorio Missoni is the eldest son of the company's founder, Ottavio, who at 91 still follows the business.


The Corriere della Sera newspaper reported that Ottavio and his wife Rosita were at their home in Italy, along with their daughter Angela, a chief fashion designer with the company, waiting for information about the search. Rosita Missoni designs housewears, and Angela's daughter, Margherita, has been infusing the classic designs with fresh appeal.


The Missoni house, with its trademark zigzag and other geometric patterns in sweaters, scarves and other knitwear, is one of Italy's most famous fashion brands abroad.


Vittorio Missoni has played a key role in marketing the Missoni family creations in Asia, especially in Japan, Hong Kong and South Korea as general director of marketing for Missoni SpA. He also spearheaded a push for the company's products in the United States and France. His efforts to expand the brand abroad led Missoni to be dubbed the company's "ambassador."


On Friday, Venezuela's Interior Minister Nestor Reverol said the plane was declared missing hours after taking off from Los Roques, a string of islands popular for scuba diving, white beaches and coral reefs, and where the Missonis and their friends were on vacation.


Vittorio Missoni has been described as an active sportsman and lover of the outdoors. He and his wife and their friends from northern Italy were scheduled to fly back to Italy on Friday, but their internal flight never made it to Caracas.


La Repubblica said the plane disappeared off radar screens shortly after takeoff from Los Roques on what was to been a 90-mile (140-kilometer) flight to the mainland. The Missoni brand is scheduled to display its latest menswear creations on the Milan runways in a fashion show later this month.


On Jan. 4, 2008, another plane returning to the Venezuelan mainland from Los Roques disappeared with 14 people aboard, including eight Italians. The body of the plane's Venezuelan co-pilot later washed ashore, but despite a search lasting weeks no other victims or the wreckage were found.


In 2009, a small plane returning from Los Roques with nine people aboard plunged into the Caribbean Sea, but all survived.


____


Ian James contributed to this report from Caracas, Venezuela.


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Shares in Jewel parent soar on report of deal









Stock in Jewel-Osco parent Supervalu soared 13.5 percent Friday on speculation that the company is on the brink of a deal with Cerberus Capital Management.

Shares for the Eden Prairie, Minn-based grocery company closed at $2.94.

Supervalu spokesman Mike Siemienas said the company is in talks with several suitors, though a deal is not assured.  A representative for Cerberus Capital Management, a New York-based investment firm, declined to comment for this story.

The Eden Prarie, Minn-based company, which also owns Albertsons, Cub, Acme and Save-A-Lot stores, said it was exploring strategic alternatives, including a sale, in July. Days later, Supervalu dismissed CEO Craig Herkert, and Chairman Wayne Sales stepped in to run the troubled grocer.

Supervalu sales and earnings have lagged those of competitors for years. In 2012, the company's stock price fell 69.6 percent and return on investment declined 68.6 percent, according to Bloomberg. Average stock prices in the broader consumer staples market rose 7.4 percent and returns gained 10.7 percent in the period.

For the fiscal year ended Feb. 25, Supervalu reported a loss of $1.04 billion, which included a $519 million operating loss and $509 million in interest expense. Sales declined 3 percent, to $27.9 billion. The company has carried an onerous debt load since buying Albertsons, which included Chicago's Jewel-Osco chain, in 2006, making Supervalu the subject of bankruptcy  speculation.

Cerberus is rumored to be in the mix to buy parts of the company. The firm has experience in the food retail sector and was an investor in the 2006 Albertsons deal. Cerberus still holds a stake in Albertsons and Strategic Restaurants, a Burger King franchisee with more than 250 restaurants.

eyork@tribune.com | twitter: @emilyyork

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Judge: No felony for dad in Facebook posting

Andre Curry, 22, talks about his felony conviction for posting a Facebook photo of his daughter bound and gagged with tape being reduced to misdemeanor domestic battery. (Chris Walker, Chicago Tribune)









A Cook County judge today reversed himself, reducing the conviction to a misdemeanor for a dad who posted a Facebook photo of his 22-month-old bound and gagged with tape.

Judge Lawrence Flood had convicted Andre Curry in November of aggravated domestic battery and aggravated battery, both felonies, and was scheduled to sentence him today when he did an abrupt about-face.


In reducing Curry’s conviction to misdemeanor domestic battery, the judge said that after reviewing the law, he found no intent to obstruct the child's breathing. He sentenced Curry to 18 months of probation and ordered him to take parenting classes.








Despite his change of heart, Flood said that Curry showed an extreme "lack of judgment."


"In your rush to show everyone how funny you were, you used...a helpless 22-month-old child who was completely dependent on you as a prop," Flood said. “This was not funny, OK? I want you to understand the gravity of your lack of judgment in this case."


Curry thanked the judge in a soft voice and apologized to his family.


"I'm sorry for everybody who’s been on the edge of their seats out there," he said. 


Curry, 22, had been free on bond since his felony conviction but had faced up to 7 years in prison before the judge changed his mind.


At trial, Flood had acquitted Curry of unlawful restraint but found him guilty of the two battery counts, saying in a brief ruling that by placing tape over the girl's mouth, he had obstructed her breathing for his own enjoyment.


"To use a child...as a toy or a prop in an odd attempt at humor is conduct of an insulting or provoking nature," Flood said at the time.


Curry told police he was playing with his daughter one night at their South Side home and used blue painter’s tape to bind her ankles and wrists and cover her mouth. He then snapped a photo and uploaded it on his Facebook page.


Across the top of the photo were the words: "This is wut happens wen my baby hits me back," according to prosecutors and police reports. The message was followed with a winking emoticon.


Family members have said that Curry is playful and the photograph was meant to be a joke.


But the image went viral on the Internet, prompting a flood of calls to police and state child-welfare authorities from Curry’s friends on Facebook and others who had seen it.


After Curry’s felony conviction in November, Curry’s attorney, Sam Adam Jr., blasted prosecutors, saying they had overcharged the case because of the publicity. He said the domestic battery law wasn’t intended to punish a loving parent who made a mistake but didn’t injured his child.


He filed a motion asking Flood to reconsider the verdict, arguing that the judge had incorrectly found that Curry had impeded the child’s breathing or attempted to strangle her, elevating the charge to a felony. The eight-page filing contained innocuous examples of someone having their mouth covered, including one photo of a child playfully holding her hand over the mouth of President Barack Obama during a photo op.


In reversing his ruling today, Judge Flood said he agreed that prosecutors had not proven there was any “intent to strangle” or to keep the child from breathing. The judge cited testimony from both police and Curry’s sister that the tape was over the child’s mouth for only a matter of seconds.


It is extremely rare for a trial judge to overturn his own ruling. Typically, if a case is reversed it comes after an appeal is filed before the Illinois Appellate Court.


After the hearing, Adam, a veteran criminal defense attorney who has tried hundreds of cases at the Leighton Criminal Court Building, estimated he wins only about 1 percent of his motions to reconsider. He said trying to convince a judge he or she was wrong is a tricky maneuver, but that most judges know it’s not a personal attack.


“You have to be very careful when you say, “I think you’re wrong here,’” Adam said. “But I have a client.. I believe in, and I believed that the judge was wrong on what the state proved.”


After the hearing, Curry hugged his pastor, Torrey Barrett, who has hired Curry to mentor other young fathers as part of the KLEO Community Life Center that Barrett runs in the Washington Park neighborhood. Curry said he hoped his story would help others remain a positive force in their children’s lives.


“From the bottom of my heart, I’m sorry for the pain I put everybody through, everyone who had to see that picture,” Curry said.


Asked what he learned from the ordeal, Curry said emphatically, “Think before you do.”


Curry, who spent 39 days in jail before he was freed on bond, said the experience has humbled him but not made him bitter or angry.


“I think for my actions I deserved to be put through this. It was actually a life-learning experience for myself,” he said.


Curry said he knew that as his daughter grows older, she will hear stories about the case and possibly even see the picture. “It’ll just be something we’ll sit back and laugh at as a family like ‘Look what daddy went through for you,’” he said.


He said he was looking forward to seeing his daughter soon. Since his release from jail, Curry was allowed only sporadic, supervised  visits with his daughter. That restriction will be lifted as long as he completes the parenting classes and stays out of trouble.


“I’m gonna pick her up and throw her in the air,” Curry said, smiling. “And I’m going to catch her and spin her around.”


jmeisner@tribune.com





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EU says its Google case not affected by U.S. ruling


BRUSSELS (Reuters) - A decision by U.S. regulators to end a probe into whether Google Inc hurt rivals by manipulating internet searches will not affect the European Union's examination of the company.


"We have taken note of the FTC (Federal Trade Commission) decision, but we don't see that it has any direct implications for our investigation, for our discussions with Google, which are ongoing," said Michael Jennings, a spokesman for the European Commission, the EU executive.


U.S. regulators on Thursday ended their investigation into the giant internet company, which runs the world's most popular search engine.


Other internet companies, such as Microsoft Corp, had complained about Google tweaking its search results to give prominence to its own products. But the FTC said there was not enough evidence to pursue a big search-bias case.


The European Commission has for the past two years been investigating complaints against Google, including claims that it unfairly favored its own services in its search results.


Google presented informal settlement proposals to the Commission in July. On December 18 the Commission gave the company a month to come up with detailed proposals to resolve the investigation.


If it fails to address the complaints and is found guilty, Google could eventually be fined up to 10 percent of its revenue - a fine of up to $4 billion.


(Reporting By Ethan Bilby; Editing by Sebastian Moffett and David Goodman)



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Chiefs, GM Pioli part ways after 4 seasons in KC


KANSAS CITY, Mo. (AP) — Scott Pioli is out as general manager of the Kansas City Chiefs, who have been negotiating the past two days with Andy Reid to become their next coach.


Pioli and the team "mutually parted ways," the Chiefs said in a statement Friday. The decision came after four tumultuous seasons marked by poor draft choices, ineffective free-agent moves, failed coaching hires and a growing fan rebellion.


"I truly apologize for not getting the job done," Pioli said.


The Chiefs fired coach Romeo Crennel on Monday after finishing 2-14, matching the worst record in their 53-year history. Chiefs chairman Clark Hunt said other changes could be made, and indicated that Pioli's future could be determined by their next coach.


A person familiar with the situation told The Associated Press the team is nearing a deal with Reid, who was fired after 14 seasons with the Philadelphia Eagles. The person spoke to AP on condition of anonymity because negotiations were ongoing. It is believed that Reid would prefer to work with his own general manager.


"After several productive conversations, we made the difficult decision to part ways with Scott Pioli and allow him to pursue other opportunities," Hunt said in a statement Friday.


"This was a difficult decision for Scott as well," Hunt said. "He has a great deal of appreciation for the history of this franchise, for our players, coaches and employees, and especially our great fans."


Kansas City will have the No. 1 pick in the NFL draft, and with five players voted to the Pro Bowl, there are certainly pieces in place for the Chiefs to make rapid improvement.


But most of those Pro Bowl players were drafted by Pioli's predecessor, Carl Peterson. The former Patriots executive struggled to find impact talent, particularly at quarterback, while cycling through coaches and fostering a climate of dread within the entire organization.


Numerous longtime staff members were fired upon Pioli's arrival, and his inability to connect with fans resulted in unrest unlike anything the franchise has known. Some of them even paid for banners to be towed behind planes before home games asking that he be fired.


Those fans finally got their wish.


The biggest reason ultimately wasn't the banners and posters, but by the performance of the Chiefs. And that was a reflection of the roster Pioli assembled, one that looked good on paper but not on the field.


Things were no better away from the field, either.


On Dec. 1, linebacker Jovan Belcher shot the mother of his 3-month-old daughter, Kasandra Perkins, at a home not far from Arrowhead Stadium. He then drove to the team's practice facility and was confronted by Pioli, Crennel and defensive coordinator Gary Gibbs.


After thanking the three of them for giving him a chance in the NFL, Belcher turned around in the parking lot, kneeled down and shot himself in the head.


Pioli hasn't spoken publicly since then but issued a statement Friday in which he thanked the organization for giving him an opportunity to be its GM.


"The bottom line is that I did not accomplish all of what I set out to do," Pioli said. "To the Hunt family — to the great fans of the Kansas City Chiefs — to the players, all employees and alumni, I truly apologize for not getting the job done."


Pioli often spoke of putting together "the right 53," but he routinely failed to do so.


His biggest move upon being hired was trading for Patriots backup Matt Cassel and then giving him a $63 million, six-year deal. Cassel went to the Pro Bowl in 2010, when the Chiefs won a surprising AFC West title, but he struggled so mightily that he was benched this season.


Many of Pioli's moves in free agency also backfired.


Tight end Kevin Boss sustained a season-ending head injury in Week 2, running back Peyton Hillis was a shadow of his former self, right tackle Eric Winston got into a messy situation by calling out Chiefs fans during an early season loss, and cornerback Stanford Routt was cut under mysterious circumstances despite signing an $18 million, three-year contract.


One of his biggest shortcomings was in the draft.


He wasted the third overall pick in 2009 on defensive end Tyson Jackson, who has struggled to become an every-down player. The only other player who has made a contribution from Pioli's first draft has been kicker Ryan Succop, their seventh-round selection.


Pioli fared better in 2010, when he nabbed Pro Bowl safety Eric Berry in the first round, but the past two years have been a disappointment. Wide receiver Jon Baldwin, his first-round pick in 2011, has barely made an impact, and defensive tackle Dontari Poe — the 11th overall pick last April — failed to make the kind of impression the Chiefs had hoped.


Pioli didn't fare much better when it came to coaches.


He fired Herm Edwards soon after he was hired and chose Todd Haley as the replacement, but their relationship was strained from the start. Haley was fired last December and Crennel made the interim coach, and then Pioli made the move permanent a few weeks after the season ended.


While beloved and respected by his players, Crennel struggled in his second stint as a head coach, and was dismissed after a 2-14 finish — only the third time in team history the Chiefs failed to win at least three games in a season.


___


Online: http://pro32.ap.org/poll and http://twitter.com/AP_NFL


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Actor Dempsey: Coffee chain bid appears successful






SEATTLE (AP) — Actor Patrick Dempsey said it appears his bid to buy a small coffee chain has prevailed in a bankruptcy auction that included Starbucks Corp.


Late Thursday night, Dempsey announced that his company, Global Baristas LLC, made the winning bid for Tully’s Coffee. He noted in a KOMO-TV interview that a bankruptcy judge will have the final say on Jan. 11. Still, Dempsey tweeted “We got it! Thank you Seattle!”






Dempsey’s company will pay $ 9,150,000 for Tully’s and complete the purchase later this month after the court hearing, he said in a statement.


“I’m thrilled that we won and I’m even more excited about saving Tully’s Coffee and its hundreds of jobs,” he said. “Tully’s is a great company with committed employees, and with its base in Seattle, one of the world’s greatest cities, I’m confident we will be able to successfully build the brand and help grow the economy. “


Tully’s Coffee has 47 company-owned locations in Washington and California. The company, with more than 500 employees, filed for Chapter 11 bankruptcy protection in October.


Dempsey, who gained the nickname “McDreamy” on the TV show “Grey’s Anatomy” set in a fictional Seattle hospital, has said he wants to rescue the chain.


Seattle has been very good to me over my career, and I am honored to have the privilege to own Tully’s and work closely with the company’s employees,” he said in his statement.


After Thursday’s auction, Starbucks spokesman Zack Hutson confirmed his company participated and “is currently in a back-up position” for some of Tully’s assets. The final certification of the winning bid won’t occur until the Jan. 11 bankruptcy court hearing, Hutson said.


“We have to wait until next week to make sure everything — I believe the 11th — to make sure it’s all finalized,” Dempsey told KOMO-TV.


The Starbucks spokesman said his company made an offer for 13 of Tully’s company-owned stores in the Puget Sound region plus 12 outlets at Boeing Co. sites. Hutson said another bidder made an offer for all other assets — and is in a back-up position for those.


Also in the running was Baristas Coffee, which operates a chain of drive-thru espresso stands featuring female employees in skimpy outfits.


Both Starbucks and Tully’s are based in Seattle.


The auction process was not public.


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FDA proposes sweeping new food safety rules


WASHINGTON (AP) — The Food and Drug Administration on Friday proposed the most sweeping food safety rules in decades, requiring farmers and food companies to be more vigilant in the wake of deadly outbreaks in peanuts, cantaloupe and leafy greens.


The long-overdue regulations are aimed at reducing the estimated 3,000 deaths a year from foodborne illness. Just since last summer, outbreaks of listeria in cheese and salmonella in peanut butter, mangoes and cantaloupe have been linked to more than 400 illnesses and as many as seven deaths, according to the Centers for Disease Control. The actual number of those sickened is likely much higher.


The FDA's proposed rules would require farmers to take new precautions against contamination, to include making sure workers' hands are washed, irrigation water is clean, and that animals stay out of fields. Food manufacturers will have to submit food safety plans to the government to show they are keeping their operations clean.


Many responsible food companies and farmers are already following the steps that the FDA would now require them to take. But officials say the requirements could have saved lives and prevented illnesses in some of the large-scale outbreaks that have hit the country in recent years.


In a 2011 outbreak of listeria in cantaloupe that claimed 33 lives, for example, FDA inspectors found pools of dirty water on the floor and old, dirty processing equipment at the Colorado farm where the cantaloupes were grown. In a peanut butter outbreak this year linked to 42 salmonella illnesses, inspectors found samples of salmonella throughout a New Mexico peanut processing plant and multiple obvious safety problems, such as birds flying over uncovered trailers of peanuts and employees not washing their hands.


Under the new rules, companies would have to lay out plans for preventing those sorts of problems and how they would correct them.


"The rules go very directly to preventing the types of outbreaks we have seen," said Michael Taylor, FDA's deputy commissioner for foods.


The new rules come exactly two years to the day President Barack Obama's signed food safety legislation passed by Congress. The 2011 law required the agency to propose a first installment of the rules a year ago, but the Obama administration held them until after the election. Food safety advocates sued the administration to win their release.


In an effort to stave off protests from farmers, the farm rules are tailored to apply only to certain fruits and vegetables that pose the greatest risk, like berries, melons, leafy greens and other foods that are often eaten raw. A farm that produces green beans that will be canned and cooked, for example, would not be regulated.


None of the proposed regulations would take effect until after a 120-day comment period. The FDA also is giving the farmers ample time beyond that to comply. Larger farms wouldn't be regulated for more than two years; smaller farms would have even more time.


The farm and manufacturing rules are only one part of the food safety law. The bill also authorized more surprise inspections by the FDA and gave the agency additional powers to shut down food facilities. In addition, the law required stricter standards on imported foods. The agency said it will soon propose other overdue rules to ensure that importers verify overseas food is safe and to improve food safety audits overseas.


Food safety advocates frustrated over the last year as the rules stalled praised the proposed action.


"The new law should transform the FDA from an agency that tracks down outbreaks after the fact, to an agency focused on preventing food contamination in the first place," said Caroline Smith DeWaal of the Center for Science in the Public Interest.


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'Lincoln,' 'Argo' earn Writers Guild nominations


LOS ANGELES (AP) — "Lincoln" and "Zero Dark Thirty" are adding to their front-runner status for Hollywood's awards season.


The two dramas earned nominations from the Writers Guild on Friday for outstanding screen writing.


"Lincoln" is up for adapted screenplay, along with "Argo," ''Silver Linings Playbook," ''Life of Pi" and "The Perks of Being a Wallflower."


"Zero Dark Thirty" was nominated for original screenplay, along with "Flight," ''Looper," ''The Master" and "Moonrise Kingdom."


In the documentary category, "The Central Park Five," ''The Invisible War," ''Mea Maxima Culpa, "West of Memphis," ''We Are Legion: The Story of the Hacktivists," and "Searching for Sugar Man" earned nominations.


Winners will be announced during simultaneous ceremonies in New York and Los Angeles on Feb. 17.


___


Online:


www.wga.org


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U.S. unemployment holds at 7.8%

CBS News business and economics correspondent Rebecca Jarvis talks to Norah O'Donnell and Anthony Mason about the final jobs report of 2012 to be released later today.









The pace of hiring by U.S. employers eased slightly in December, pointing to a lackluster pace of economic growth that was unable to make further inroads in the country's still high unemployment rate.

Payrolls outside the farming sector grew 155,000 last month, the Labor Department said on Friday. That was in line with analysts' expectations and slightly below the level for November.






Gains in employment were distributed broadly throughout the economy, from manufacturing and construction to health care.

That should reinforce expectations that the economy will grow about 2 percent this year, unlikely to quickly bring down the unemployment rate or make the U.S. Federal Reserve rethink its easy-money policies, which have been propping up the recovery.

"It's not a booming economy, but it is growing," Jim O'Sullivan, an economist at High Frequency Economics in Valhalla, New York, said before the data was released.

The jobless rate held steady at 7.8 percent in December, down nearly a percentage point from a year earlier but still well above the average rate over the last 60 years of about 6 percent.

The Labor Department raised its estimate for the unemployment rate in November by a tenth of a point to 7.8 percent, citing a slight change in the labor market's seasonal swings.

Most economists expect the U.S. economy will be held back by tax hikes this year as well as by weak spending by households and businesses, which are still trying to reduce their debt burdens.

Friday's data nonetheless gave signals of growing momentum in the labor market's recovery from the 2007-09 recession. Many economists had expected December's payroll gains to be padded by one-time factors like the recovery from a mammoth storm that hit the East Coast in late October.

The government had said last month the storm had no substantial impact on the November data, and many economists expected the government to recant by revising downward in Friday's report its estimate for payroll gains in November. Instead, the government revised its estimate for November payrolls upward by 15,000.

"There is some evidence that underlying jobs growth has improved," Paul Dales, an economist at Capital Economics in London, said before the report was released.

AUSTERITY'S BITE

Despite the signs of some momentum in hiring, a wave of government spending cuts due to begin around March loom over the economy.

Many economic forecasts assume the cuts - which would hit the military, education and other areas - will ultimately be pushed into next year as part of a deal sought by lawmakers to reduce gradually the government's debt burden.

Initially, the cuts were planned to have begun this month as part of a $600 billion austerity package that also included tax hikes. Hiring in December may have been slowed by uncertainty over the timing of the austerity, economists say.

Congress this week passed legislation to avoid most of the tax hikes and postpone the spending cuts.

Even with the last-minute deal to avoid much of the "fiscal cliff," most workers will see their take-home pay reduced this month as a two-year cut in payroll taxes expires.

That leaves the Fed's efforts to lower borrowing costs as the main program for stimulating the economy.

The Fed has kept interest rates near zero since 2008, and in September promised open-ended bond purchases to support lending further. On Thursday, however, minutes from the Fed's December policy review pointed to rising concerns over how the asset purchases will affect financial markets.

Analysts ahead of the report expected some of the strength in job creation in December would be due to the Fed's policies.

"Despite the end-of-year angst over the ‘fiscal cliff,' financial conditions remained supportive of job growth in December," economists at Nomura said in a note to clients earlier in the week.
 

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