U.S. economy added 69K jobs in May, fewest in a year
The American economy is in trouble again.
Employers in the United States 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 strong 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 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.
Job growth holds steady in Utah, according to Mark Knold, chief economist for the Utah Department of Workforce Services.
Although state job creations numbers for May will not be available for a couple of weeks, Knold anticipates those figures will show Utah's economy created anywhere from 25,000 to 28,000 jobs for the 12 months ended May 31.
"I'm not expecting May's numbers to change much from April," Knold said.
Utah employers created 25,200 jobs in the 12 months ended April 30 for a year-over-year increase of 2.1 percent, which was higher than the U.S. rate of 1.3 percent. And while the state's unemployment rate in April increased to 6 percent from 5.8 percent in March, Knold said he doesn't believe the state's growth is in danger of stalling.
"We're going down the road at a steady pace but we're just not accelerating."
Some financial analysts said that the nation's 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 launched last month and ends in June.
But low interest rates, other analysts pointed out, are not the problem. An investor stampede into bonds on Friday drove the yield on the 10-year U.S. Treasury note as low as 1.44 percent, the lowest on record.
Fed Chairman Ben Bernanke testifies next week before a joint committee of Congress, and the Fed next meets June 19 and 20.
Investors on Friday made their disappointment clear.
The Dow, the S&P 500 and the Nasdaq composite index all fell by more than 2 percent. The S&P, which was up 12 percent for the year through March, was left with a slender gain of 1.6 percent.
Homebuilder stocks fell the most, apparently because the dismal picture for the economy outweighed a report that construction spending rose for a second month in April.
The price of gold, which some investors have often bought over the past three years for safety in turbulent economic times, climbed $58 an ounce, to $1,622, the highest since early May.
Anticipating weaker world demand, investors drove down the price of oil by $3.49 a barrel to $83.04, the lowest since October and 24 percent below its peak of $109.77 in February.
That will at least provide help for American drivers: The price of gasoline, which peaked at an average of $3.94 a gallon in April, has fallen to $3.61. It is below $3 in parts of South Carolina, and the national average should be below $3.50 soon.
Tribune reporter Steven Oberbeck contributed to this story.