Jobs Slowdown Adds to Global Fears

[WestVirginiaRebel]

Wall Street Journal:

Feeble hiring by U.S. employers in May added gloom to an already darkening picture of the economy, which appears to be joining Europe and Asia in a spreading slowdown.

Employers added a seasonally adjusted 69,000 jobs last month, the smallest increase in a year, while numbers for the two prior months were clipped by a combined 49,000. The politically salient jobless rate ticked up—to 8.2% from 8.1% in April—and the report quickly became a flash point for a presidential election focused on the job-creating bona fides of the candidates.

Jobs were only one of the disappointing numbers out Friday that fueled anxiety about the U.S. economy. A separate report showed manufacturing growth cooled in May, with troublingly sharp drops in both production and exports. Another report showed consumer spending rose in April, but by more than incomes, suggesting the risk of consumers struggling to keep spending.

To be sure, the U.S. shows resilience in some areas. Inflation remains tame and auto sales continue to boom, while falling energy prices are helping ease some of the stress for consumers. But the larger picture is of a U.S. economy that seemed to be gaining traction earlier in the year only to start wobbling as the weather got warmer—a familiar pattern in recent years.

Stock markets tumbled in the wake of the job report. The Dow Jones Industrial Average slid more than 200 points, giving up its gains for the year, and the Standard & Poor's 500 entered correction territory.

Jittery investors fled to bonds, with the 10-year Treasury's yield falling below 1.5% for the first time ever. Gold surged above $1,600 and the dollar weakened against the euro and yen as traders positioned for possible stimulative action by the Federal Reserve.

The dismal jobs report is sure to sharpen a debate at the Federal Reserve about whether to do more to spur economic growth. Some Fed officials who are less worried about inflation had already started lobbying for additional action before Friday's numbers.

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The non-recovery continues.