`This is horrible': US adds just 69,000 jobs in May; stocks suffer worst fall of year

  • Article by: PAUL WISEMAN , Associated Press
  • Updated: June 1, 2012 - 11:02 PM
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In this Thursday, May 31, 2012, job seekers gather for employment opportunities at the 11th annual Skid Row Career Fair at the Los Angeles Mission in Los Angeles.

Photo: Damian Dovarganes, Associated Press - Ap

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WASHINGTON - Another bad month for the U.S. job market is lengthening the list of perils facing the global economy.

American employers added only 69,000 jobs in May, the fewest in a year and not even close to what economists expected. For the first time since June, the unemployment rate rose, to 8.2 percent from 8.1 percent.

It was the third month in a row of weak job growth and further evidence that, just as in 2010 and 2011, a winter of hope for the economy has turned to a spring of disappointment.

"This is horrible," said Ian Shepherdson, chief economist at High Frequency Economics, a consulting firm.

The job figures, released Friday by the Labor Department, dealt a blow to President Barack Obama at the start of a general election campaign that will turn on the economy.

They also deepened the pessimism of investors, who even before the report was released were worried about a debt crisis in Europe with no sign of solution and signs of a slowdown in the powerhouse economy of China.

"The U.S. is not an island, and what happens abroad matters here," said Diane Swonk, chief economist at Mesirow Financial. "The weakness in Europe, in particular, has a global reach and is affecting us."

The Dow Jones industrial average fell 275 points, its worst day of the year, and for the first time was down for 2012. The Standard & Poor's 500 index is almost 10 percent below its 2012 high, the traditional definition of a market correction.

Mitt Romney, who on Tuesday cleared the number of convention delegates required to win the Republican presidential nomination, told CNBC that the report was "devastating."

He called for an emphasis on energy development, pledged to "kill" the health care overhaul that Obama saw through in 2010 and said he would reduce taxes and government spending. The clearest fix for the economy, he said, was to defeat Obama.

"It is now clear to everyone that President Obama's policies have failed to achieve their goals and that the Obama economy is crushing America's middle class," said Romney, the former Massachusetts governor.

Obama, in Minnesota, pushed a proposal to expand job opportunities for veterans returning from Iraq and Afghanistan. He said that the economy is not creating jobs "as fast as we want" but vowed that it would improve.

"We will come back stronger," he said. "We do have better days ahead."

Alan Krueger, head of the president's Council of Economic Advisers, pointed out that the country has added jobs for 27 months in a row, including 4.3 million jobs in the private sector. The economy still has a few bright spots. Americans bought cars and trucks a strong pace last month, giving automakers their best May since 2008.

Underscoring the challenge for Obama with five months to go in the campaign, a May poll by The Associated Press and GfK, a research company, showed that 52 percent disapproved of Obama's handling of the economy while 46 percent approved.

Some financial analysts said that the dismal job figures put pressure on the Federal Reserve to take additional steps to help the economy, but it was not clear how much good the Fed could do beyond trying to inspire confidence.

The central bank has already kept the short-term interest rate it controls at a record low of almost zero since the fall of 2008, during the financial crisis, and pledged to keep it there through late 2014.

It has undertaken two rounds of massive purchases of government bonds, starting in March 2009 and November 2010, to help drive long-term interest rates down and stimulate stock prices. Another program to lower long-term interest rates, known as Operation Twist, was announced last September and ends in June.

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