US job growth stalls, recession fears rise

Employers stopped adding jobs in August,an alarming setback for an economy that has struggled to grow and might be atrisk of another recession .

The government also reported that the unemployment rateremained at 9.1 per cent. It was the weakest jobs report since September 2010.

Stocks tumbled on the news. The Dow Jones industrial averagesank more than 160 points in morning trading.

Total payrolls were unchanged in August, the first timesince 1945 that the government has reported a net job change of zero.Economists warned that the economy can't keep growing indefinitely if hiringremains stalled.

"Underlying job growth needs to improve immediately inorder to avoid a recession," said HSBC economist Ryan Wang.

Fears that the United States will slip back intorecession have been rising since the government reported over the summer thatthe economy barely grew in the first half of the year. Consumer and businessconfidence has been sapped by the political standoff over the federal debtlimit, a downgrade in the U.S.government's credit rating and a debt crisis in Europe.

Job growth had already been sputtering before it stalledcompletely last month. The economy produced an average 166,000 a month in thefirst quarter, 105,000 a month in the second quarter and just 28,000 a month sofar in the third quarter, said John Silvia, chief economist at Wells Fargo.

The dispiriting job numbers for August will put morepressure on the Federal Reserve, President Barack Obama and Congress to findways to stimulate the economy. So far, Fed Chairman Ben Bernanke has beenreluctant to try a third round of bond purchases designed to jolt the economyby further lowering long-term interest rates.

Obama next week will deliver a rare address to a jointsession of Congress to introduce a plan for creating jobs and boosting economicgrowth. But House Republicans have resisted any federal stimulus spending.

On Friday, Obama took a step toward winning Republicansupport. He directed the Environmental Protection Agency to abandon rules thatwould have tightened health-based standards for smog. Congressional Republicansand some business leaders have objected to the proposed rules, saying theywould have cost jobs.

The weakness in employment was underscored by revisions tothe jobs data for June and July. Collectively, those figures were lowered toshow 58,000 fewer jobs added. The downward revisions were all in governmentjobs.

The average work week also declined, and hourly earningsfell by 3 cents to $23.09.

"There is no silver lining in this one," saidSteve Blitz, senior economist at ITG Investment Research. "It is difficultto walk away from these numbers without the conclusion that the economy issimply grinding to a halt."

 

With job creation stalled and wages declining, consumerswon't see much gain in incomes. That will limit their ability to spend, whichundercuts growth. Consumer spending accounts for about 70 percent of theeconomy.