Damian Dovarganes, Associated Press
Read more: Stocks fall sharply after weak jobs report
WASHINGTON — The U.S. economy suddenly looks a lot weaker.
U.S. employers created only 69,000 jobs in May, the fewest in a year, and the unemployment rate ticked up.
The dismal jobs data will fan fears that the economy is sputtering. It also puts President Barack Obama on the defensive five months before his re-election bid. And it could lead the Federal Reserve to take further steps to help the economy.
The Labor Department also said Friday that the economy created far fewer jobs in the previous two months than first thought. It revised those figures down to show 49,000 fewer jobs created. The unemployment rate rose to 8.2 percent from 8.1 percent in April, the first increase in 11 months.
Job creation is the fuel for the nation's economic growth. When more people have jobs, more consumers have money to spend — and consumer spending drives about 70 of the economy.
Here's what The Associated Press' reporters are finding:
What can be done to energize U.S. hiring?
Sung Won Sohn, an economics professor at California State University, said Congress and the Obama administration must work immediately to address the "fiscal cliff" looming at year's end. That's when the economy will be hit with higher taxes and across-the-board government spending unless Democrats and Republicans forge some compromise.
Uncertainty over what will be done about the fiscal cliff will likely hang over the U.S. economy for months.
"Businesses have pulled in their horns, given the growing amount of uncertainty," Sohn said.
He said Federal Reserve Chairman Ben Bernanke could also start discussing another round of Fed bond buying to try to further lower long-term interest rates.
Sohn noted that more bond buying remains unlikely given how low rates are already. Still, he said, "just the fact that Bernanke is talking about more Fed bond buying would be important. What we need is a psychological lift."
— Martin Crutsinger, AP Economics Writer
PREDICTING MORE FED ACTION
"This clearly puts the Fed back in play for a near-term easing operation," says Jay Feldman, director of U.S. economics for Credit Suisse.
Feldman expects the Fed to act at its next meeting June 19-20 — perhaps by buying mortgage-backed investments to try to push down long-term mortgage rates or by doing something unexpected.
That said, mortgage rates are already hitting bottom. The average rate on the 30-year fixed-rate mortgage fell this week to 3.75 percent. That's the lowest since long-term mortgages began in the 1950s.
— Paul Wiseman, AP Economics Writer
PAIN ON WALL STREET
Stocks sank after the release of the jobs report. The Dow Jones industrial average dropped more than 200 points, erasing what was left of its gain for the year and putting the index on track for its worst one-day drop since November.
Economic data from Europe and Asia also came in weak, and traders sold all types of risky investments and stampeded toward the safety of U.S. government bonds. Bond prices rose sharply. And the yield on the benchmark 10-year U.S. Treasury note touched 1.44 percent, the lowest on record.
— Daniel Wagner, AP Business Writer
DUELING POLITICAL VIEWS
- Working on Thanksgiving Day? Here's why most...
- 4 reasons why you shouldn't shop on Black Friday
- Immigration reform will boost the economy,...
- Our complete guide to Black Friday, Cyber...
- Facing health law hikes, consumers mull options
- Thanksgiving trumps Black Friday for deals
- Review: 4 shopping apps that will save you money
- Dave Ramsey says: Saving for education trumps...
- Obama immigration plan good, not great... 13
- Working on Thanksgiving Day? Here's why... 12
- White House: Immigration steps would... 7
- Ford's new F-150 to get 26 mpg, tops... 4
- Thanksgiving trumps Black Friday for deals 4
- Facing health law hikes, consumers mull... 4
- Immigration reform will boost the... 4
- The best time of year to buy (Hint:... 1