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Job growth stalls, fuels recession fears (Reuters)
WASHINGTON (Reuters) – U.S. employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy. For the first time in nearly a year the economy failed to create new jobs on a net basis according to the Labor Department's monthly nonfarm payrolls survey on Friday. Economists had expected nonfarm employment to rise 75,000 last month but they cautioned against viewing the data as a surefire sign of recession. A worsening debt crisis in Europe and an acrimonious political fight over the U.S. government budget and debt, which led Standard & Poor's to strip the country of its AAA credit rating, ignited a massive stock market sell-off last month and sent business and consumer confidence tumbling. "The economy is struggling against stiff headwinds, which appear to have intensified in recent months," said Millan Mulraine, senior macro strategist at TD Securities in New York. "While it has clearly not fallen off the cliff, there is little to suggest it is anywhere close to regaining its momentum." Investors fled riskier assets on the news, sending stocks tumbling, pushing up the price of gold, and lowering U.S. Treasury bond yields. Employment was dampened by 45,000 striking workers at Verizon Communications. Those workers have since returned to work and will <a href="http://www.hairstraightenersghds-sale.com"><strong>straighteners sale</strong></a> be counted as on the payroll in September. But even taking that into account the report was largely bleak. The unemployment rate, however, held at 9.1 percent as a survey of households found both job growth and, for the first time in a year, an expanding labor force. With the jobless rate stuck above 9.0 percent and confidence collapsing, President Barack Obama faces pressure to come up with ways to spur job creation. The health of the labor market could determine whether he wins re-election next year. Obama will lay out a new jobs plan in a speech to the nation on Thursday, and White House advisers said the data underscored a need for action. "He will be very specific about what we can do that can have a meaningful impact on job growth in the economy right away," <a href="http://www.cheapuggs-shop.com/classic-short-c-242.html"><strong>uggs snow boots</strong></a> Gene Sperling, a top economic adviser to Obama, told Reuters Insider. Obama on Friday withdrew new rules to limit smog pollution that businesses had argued would kill jobs and cost them billions of dollars. The Republican speaker of the House of Representatives, John Boehner, said in a statement it was time for political cooperation "to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth." But speaking later to reporters in Ohio, Boehner struck a combative tone toward the White House and Senate Democrats. "They want to push for the same kind of agenda -- more stimulus spending and short-term gimmicks, higher taxes, more regulations. We've seen more of this before and it has failed." EYES ON THE FED Despite massive cash injections by both the government and the Fed, sustainable job growth has eluded the economy. "The entire recovery has been a recovery in name only. The Achilles heel ... has always been the lack of job creation," said John Ryding, chief economist at RDQ Economics in New York. The data could strengthen the hand of officials at the Fed who wanted to do more to help the sputtering economy in August. The economy needs to generate about 150,000 jobs each month just to keep the unemployment rate steady over time. The central bank, which meets on September 20-21, cut overnight interest rates to near zero in December 2008 and has bought $2.3 trillion in securities to inject cash into the economy. Despite simmering inflation pressures, many economists expect the Fed to launch a third round of bond buying soon to put downward pressure on long-term rates, partly because the federal government appears intent on belt-tightening. "Even the inflation hawks have to be concerned by this report," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "With fiscal policy at all levels of government restraining growth, the Fed is the only game in town." Expectations of further Fed action drove the yield on the benchmark 10-year Treasury note below 2.0 percent. The U.S. dollar rose on safe-haven flows, while the S&P 500 stock index fell 2.53 percent. UNDERLYING PACE OF JOB GROWTH WEAK While employment was held back by the Verizon strike, the impact was offset somewhat by the return of 23,000 public employees in Minnesota after a partial government shutdown. Stripping out both of those factors, employment would have expanded by more than 20,000 jobs last month and, without the strike, private payrolls would have increased by 62,000, instead of a paltry 17,000. Still, the overall tenor of the report was decidedly weak. Employers created a combined 58,000 fewer jobs in June and July than previously thought, and the length of the average workweek fell 0.1 hour to 34.2 hours, the fewest since January. In addition, average hourly earnings dropped three cents. About 43 percent of the 14 million Americans unemployed in August had been out of work for at least six months. The jobless rate would have been 16.2 percent if people who want to work but have given up looking for jobs and those working only part time for economic reasons were counted. Although hiring cooled, fairly steady readings on claims for jobless benefits, relatively strong consumer spending <a href="http://www.cheapstraightenersghd2011.com/ghd-2010-new-red-lust-p-5729.html"><strong>hair straighteners ghds</strong></a> and continued demand for manufactured goods offer hope the economy will avoid recession. Analysts say the economy should pick up steam from here, although they warn the recovery is so weak that any fresh shock could send it tumbling. In the first half of the year, the economy expanded at less than a 1.0 percent annual rate. (Editing by Neil Stempleman and Tim Ahmann)
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