WASHINGTON (AP)— The U.S. economy suddenly looks a lot weaker.
Only 69,000 jobs were added in May, the fewest in a year, and the unemployment rate rose from 8.1 percent to 8.2 percent.
The dismal jobs data will heighten 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 added far fewer jobs in the previous two months than first thought — 11,000 fewer in March and 38,000 fewer in April. And the increase in unemployment was the first 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:
WHY ONE EMPLOYER ISN’T HIRING
When Michael Eberstadt opened his New York City soul food restaurant in 2007, he had a staff of about 25.
“That was right before the world ended,” said Eberstadt, owner of Rack & Soul, referring to the recession that began in December that year. He’s since shrunk his staff to about 15.
“Hiring is really a function of demand,” he said. “Unfortunately, if the demand isn’t there, then you don’t need to hire.”
Eberstadt said his restaurant was “hit hard and never really recovered” from the recession. Last year, the top 500 restaurant chains reported sales growth of just 3.5 percent, according to the food industry researcher Technomic Inc.
Still, Eberstadt is relieved he hasn’t had to lay anybody off recently. His payroll has held steady for the past year.
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.