U.S. added 80,000 jobs in June as economy struggles

The nation’s labor market treaded water in June, adding to the mounting evidence that the economic recovery has stalled just as the presidential campaign heads into its stretch run.

Employers added a paltry 80,000 jobs last month, and the unemployment rate remained stuck at 8.2 percent, the Labor Department reported Friday. With voter impressions about the state of the economy hardening four months before Election Day, the slowdown is making it more difficult for President Obama to make the case that his economic policies have been entirely effective.

After a promising beginning of the year, the pace of job creation slowed substantially in the spring. Economists have become grim about the future, scaling back forecasts of even modest job growth.

“If the economy were near full employment, the pace of job gains would be neither surprising nor disappointing,” said Gary Burtless, a Brookings Institution economist. “In an economy in which the unemployment rate has exceeded 8 percent for 41 months, however, the job gains represent an intense disappointment.”

The downbeat report is likely to put pressure on the Federal Reserve, Congress and the White House to do more to stimulate economic growth and new jobs.

Fed Chairman Ben S. Bernanke has said the Fed stands ready to take new action — perhaps a large bond purchase aimed at pushing down already low interest rates — if the job market deteriorates substantially. But some analysts question whether the Fed has enough ammunition to spark the economy.

Republican presidential candidate Mitt Romney was quick to seize on news of the weak jobs report, calling it evidence of President Obama’s mismanagement of the economy.

“It doesn’t have to be this way,” Romney said at a New Hampshire hardware store. “America can do better, and this kick in the gut has got to end.”

Romney added that corporate taxes are too high, the nation’s regulatory burdens too onerous and U.S. trade policy too restrictive to maximize job creation.

For their part, Obama administration officials said the report underscores the need for Congress to do more to stimulate job creation and the depth of the economic problems the president inherited when he took office more than three years ago.

“I want to get back to a time when middle-class families and those working to be in the middle class have some security,” Obama said in Poland, Ohio, during the second day of his Rust Belt tour. “That’s our goal. We’ve got to tap into the basic character of this country because our character has not changed even though we’ve gone through some tough times the past few years.”

Congressional Republicans and the administration have been at odds over which policies would best promote growth. Among other things, Obama has pushed for more infrastructure spending, but GOP congressmen have balked at new spending.

“The president bet on a failed ‘stimulus’ spending binge that led to 41 months of unemployment above 8 percent. He bet on a government takeover of health care that’s driving up costs and making it harder for small businesses to hire,” said House Speaker John A. Boehner (R-Ohio).

Alan B. Krueger, chairman of Obama’s Council of Economic Advisers, countered that the economy is emerging from a deep hole that was long in the making. “There are no quick fixes to the problems we face that were more than a decade in the making,” he said.

Markets slid after the report was released. For the day, the Dow Jones and Standard & Poor’s indexes dropped by nearly 1 percent. The Nasdaq index fell 1.3 percent.

Although partisans sparred over policy, some economists said that the job market is behaving normally, given the enormous loss of wealth many Americans have experienced over the past five years.

At the same time, many families are still struggling to bring their debt under control, hampering their ability to spend. Consumer spending constitutes 70 percent of economic activity.

Meanwhile, businesses have scaled back hiring as Europe suffers from fiscal turmoil and economic growth in China slows dramatically, crimping markets for U.S. exports.

“This is what should be expected after the kind of financial crisis we had,” said Dan Seiver, a San Diego State University finance professor. “When balance sheets become that sub-optimal and so many people have so much debt, you are going to have a very slow recovery.”

The Labor Department report showed a job market that seemed to flatline on many fronts in June. Manufacturing — a bright spot in the otherwise tepid recovery — added 11,000 positions. Health care added 13,000 jobs, while most other industries showed little change.

Although labor market data have shown little evidence of a new round of significant layoffs, the data also show employers are not doing much hiring.

“The slow labor market . . . once again confirms that the better payroll increases in the beginning of the year were another false start,” said Kathy Bostjancic, director of macroeconomic analysis for the Conference Board, before adding: “There is little hope of an acceleration in the pace of job growth anytime soon.”

Obama only briefly touched on the jobs numbers, devoting about two minutes of a half-hour speech to the news. On the second day of his bus tour through Ohio and Pennsylvania, Obama instead argued that his policies helped save the auto industry and boost manufacturing.

The hiring picture remains bleak even as help for the long-term unemployed is being scaled back.

Beginning this month, workers who lose their jobs in most cases will have access to just 26 weeks of state-funded unemployment insurance, meaning they might have to go many months without income until finding new jobs. Of the 12.7 million unemployed Americans who are actively seeking work, the average individual will need about nine months to find a new job, according to the National Employment Law Project.

“The economy is stuck with slow job growth and high unemployment. It desperately needs a boost to get out of this ditch,” said Christine Owens, executive director of NELP, an advocacy group for the unemployed. “There’s too much at stake for Congress to spend the next four months campaigning instead of getting serious about putting America back to work.”

David Nakamura , Philip Rucker, Lori Montgomery and Roz Helderman contributed to this report.

Michael A. Fletcher is a national economics correspondent, writing about unemployment, state and municipal debt, the evolving job market and the auto industry.
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