Economy adds paltry 54K jobs, raising fears for recovery

The economy added a paltry 54,000 jobs in May as the unemployment rate ticked up to 9.1 percent. 

The private sector created 83,000 jobs, fewer than half of what private businesses added a month ago. Local governments continued to lose workers. 

The dismal growth suggests a slowdown in the economic recovery from the Great Recession of 2008-2009. An average of 220,000 jobs was created by the economy over the past three months, but in May the figure was only a quarter of that. 

{mosads}The figures were lower than expected, and the Labor Department also lowered its estimate for how many jobs were created in March and April by an additional 35,000, adding to the gloom. 

While forecasters downgraded expectations after a slew of other reports suggested stagnant growth, a Reuters survey from Wednesday projected 150,000 new jobs, and Goldman Sachs and Citigroup both expected 100,000 new jobs. 

The economy needs to add roughly 200,000 jobs a month to keep up with population growth.

The report is bad news for the White House, which worries a poor economy could prevent President Obama from winning a second term despite a GOP field winning lackluster reviews.

Austan Goolsbee, the chairman of the White House Council of Economic Advisers, described the report as a “bump in the road.”

“There are always bumps on the road to recovery, but the overall trajectory of the economy has improved dramatically over the past two years,” he said in a statement. He noted that the economy has added 2.1 million jobs over the last 15 months, that there were solid improvements in hiring for professional and business services and education and health services, and that it is important not to read too much into a single report.

“The monthly employment and unemployment numbers are volatile, and employment estimates are subject to substantial revision,” he said.

Congressional Republicans blame the administration’s regulatory policies and the new healthcare law for some of the problems with the economy.

House Majority Leader Eric Cantor (R-Va.) immediately used the report to criticize Obama and congressional Democrats for calling for higher taxes as part of a deal to reduce annual deficits while raising the nation’s debt ceiling.

“Today’s disappointing jobs report shows that our economy needs an injection of growth-oriented policies to ensure that businesses can innovate, expand and begin hiring,” Cantor said.

“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. Instead, the president, Leader Reid and Leader Pelosi want to raise taxes on the very small-business owners and entrepreneurs that we are relying on to create jobs, which House Republicans will not let happen.”

President Obama is expected to make comments on the jobs numbers during a trip to Toledo, Ohio, where he will tour a Chrysler plant. The administration has been hailing progress in the auto sector, where all three major U.S. companies have recorded positive sales figures.

The White House and Republicans are working to negotiate a deal that would allow the nation’s $14.3 trillion debt ceiling to be raised. Republicans are demanding deep spending cuts as the price, but are holding out against any tax increases. Senate Majority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) have supported raising tax rates on wealthier households that were put in place by President George W. Bush. Obama also wants to raise those rates. 

Additionally, Democrats and the White House have called for eliminating tax breaks offered to oil companies that other manufacturers also receive. 

Labor’s report follows a report by the ADP payroll processor on Wednesday. It found only 38,000 jobs were created by the private sector in May.

—This story was posted at 6:13 a.m. and updated at 8:38 a.m.