Weak US jobs data sets challenge for White House

The economy added a paltry 54,000 new jobs last month, one quarter of the February-April pace, while the unemployment rate edged up to 9.1 percent, figures from the Labor Department showed Friday.

While the White House and economists cautioned that the poor data were likely a monthly blip, they fueled allegations that Obama\'s economic policies are failing, 18 months ahead of the next presidential election.

With employment figures for the previous two months revised downward, the report confirmed that economic growth has been stagnant since the beginning of 2011, despite government efforts to power up a job-creating recovery.

The private sector, expected to drive the economy as state and local governments slash spending, added a measly 83,000 positions, one-third the rate of the previous three months.

The mining sector added 7,000 new jobs -- driven by jumps in oil and mineral prices -- but the larger manufacturing sector, which had expanded solidly in the first part of the year, lost 5,000.

Meanwhile, the public sector at all levels cut 29,000 jobs.

"There is very little positive news in this report," said Dean Baker of the Center for Economic and Policy Research. "There are more signs suggesting slower growth than any acceleration."

Speaking at an Ohio auto plant rescued by his government, Obama did not directly cite the new data, but said "rough terrain" still lay ahead.

"We have still got a long way to go, not just in this industry, but in our economy," he told workers at the Chrysler Jeep factory.

His top economic adviser, Austan Goolsbee, admitted the numbers were bad.

"While the private sector has added more than 2.1 million jobs over the past 15 months, the unemployment rate is unacceptably high and faster growth is needed to replace the jobs lost in the downturn," Goolsbee said.

An estimated nine million jobs were lost during the crisis.

But Goolsbee cautioned "it is important not to read too much into any one monthly report."

Still, nearly 14 million people remain unemployed more than a year after the country\'s deep recession ended; 6.2 million people have been jobless for more than six months.

At 9.1 percent, the unemployment rate in May was lower than the 9.6 percent of a year earlier, but virtually unchanged since the beginning of 2011.

The data showed an average of 157,000 jobs were created each month in the first five months of 2011, far less than the 200,000 economists say is needed to reduce unemployment.

The data led some economists to lower their once three percent-plus forecasts for GDP growth in the second quarter to as low as 2.0 percent, barely different from the sluggish first quarter.

Ian Shepherdson of High Frequency Economics said the impact of Japan\'s March 11 earthquake-typhoon disaster on US manufacturers -- particularly car makers -- as well as a jump in oil prices were partly to blame.

"Overall, this is horrible," he said. "But we think it is largely a reaction -- an overreaction we would say -- to the rise in oil prices, and a very real hit to autos and tech from the Japan earthquake."

Republican leader Eric Cantor leaped on the news as evidence of misguided White House policies.

"It is astounding that despite the warning signs and economic indicators, President Obama and congressional Democrats still have failed to offer any concrete plan to create jobs, reduce our debt, or grow our economy," he said in a rapidly released statement.

And Republican Mitt Romney, who jumped into the 2012 presidential race Thursday by challenging Obama\'s economic record, tweeted that "today\'s unemployment numbers show that we are going backwards, and that is the wrong direction for America."

The data were likely to feed into the contentious debate between the White House and Republicans over measures that would slash public spending further.

The White House argues that the cuts Republicans are demanding would exacerbate unemployment, with spending cuts and layoffs at the federal, state and local levels likely to eat into gains from private sector hiring.

Briefing.com economist Jeffrey Rosen, who cut his forecast for the second quarter to a stagnation pace of 1.4 percent, warned of tougher months ahead, whatever the case, because consumer spending will remain depressed.

There is "a strong possibility" that payroll gains will remain below 100,000 for the next month or two, he said.

"This does not bode well for future income and spending," he said.

If there is no striking recovery, "our consumption forecast for the next few quarters will have to be revised lower to compensate for the lower income growth levels," keeping a damper on the overall economy, Rosen said.

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