A weak March jobs report released on Friday dampened hopes of a faster return to pre-recession employment levels, highlighting the possibility of slower job growth ahead.
The economy added 120,000 jobs in March, according to figures released in Washington by the Labor Department. This was about half the December-February pace and well short of the 210,000 economists were expecting.
This latest jobs report may be a case of "two steps forward and one step back."
Jobs Rate Declines in March
The unemployment rate declined from 8.3 percent in February to 8.2 percent in March, but the drop was largely due to people dropping out of the workforce, not to an increase in the share of the working-age population with jobs.
People stop looking for work when they become disheartened over the lack of job prospects and simply give up. An increased number of workforce dropouts points to an unhealthy economy.
"After six months of robust job gains, the mediocre March report may signal the start of slower improvements in the next few months,"says Gary Burtless, an economist at the Brookings Institution in Washington.
Rapid job growth is an important factor in kick-starting the floundering economy, since it helps boost consumer spending, which makes up 70 percent of the economy.
Low Job Growth "An Unpleasant Surprise"
"The low job growth in March was an unpleasant surprise and underscores the fact that a robust jobs recovery has not yet solidified,"says Heidi Shierholz, an economist at the liberal Economic Policy Institute in Washington.
Retail employment and the temporary help industry were two sectors of the economy that stood out as particularly weak. Employment in retail trade fell 34,000 in March, reversing six months of an average increase of 11,000 jobs. Temporary help service employment fell slightly, by 7,500, after climbing an average of 28,000 a month between August 2011 and February 2012.
Mike Brownfield, an economist at the conservative Washington-based Heritage Foundation, said that the disappointing jobs figures underscore President Obama's failure to spur recovery, and that his policies "have almost certainly held recovery back by increasing regulatory costs, increasing uncertainty, ballooning the budget deficit, and constantly threatening higher taxes."
High Unemployment Is Structural
Others economists, however, said that the problem has little to do with Washington, maintaining that high unemployment is structural -- meaning there are not enough workers with the right skills to fill job slots in a knowledge-based economy.
Greg Ip, Economics Editor of The Economist magazine, told National Public Radio's Judy Woodruff on Friday evening: "I think the economy is still on track. Possibly, what we've seen is a number that is a bit of a payback for employment growth that was stronger than we could sustain for a little while. For example, if you look at it sector by sector, manufacturing was up quite a lot. And since manufacturing has been so hard-hit, it is encouraging to see that that sector continues to make progress.”
Obama, Romney Respond to Jobs Report
President Obama tried to put the best face on the weaker-than-expected jobs report: "We welcome today's news that our businesses created another 121,000 jobs last month and the unemployment rate ticked down," he said on Friday.
"Our economy has now created more than four million private sector jobs over the past two years, and more than 600,000 in the past three months alone. But it's clear to every American that there will still be ups and downs along the way, and that we have got a lot more work to do."
Republican Presidential front-runner Mitt Romney called the report weak and troubling: "Millions of Americans are paying a high price for President Obama's economic policies," he said over the weekend. "It is increasingly clear the Obama economy is not working, and that, after three years in office, the President's excuses have run out."
Republican strategists say Romney's hopes this November hang largely on his ability to convince voters that the current pace of recovery is unacceptable and he can substantially speed it up.
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