As US hiring slows, experts ponder what would help

WASHINGTON (AP) -- 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.

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Here's what The Associated Press' reporters are finding:

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SEEKING SOLUTIONS

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

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DUELING POLITICAL VIEWS

White House economist Alan Krueger said that while the latest jobs report illustrated the need for faster growth, the administration welcomes any increase in jobs.

"We are on a better path then we had been before the president came into office," he said.

Obama's Republican challenger, Mitt Romney countered: "Today's weak jobs report is devastating news for American workers and American families. ...It is now clear to everyone that President Obama's policies have failed to achieve their goals and that the Obama economy is crushing America's middle class."

— Darlene Superville, Associated Press Writer

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GOVERNMENT ISN'T HELPING

Government jobs cuts are worsening the jobs picture. The federal government shed 5,000 jobs in May, state governments 5,000 and local governments cut 3,000.

Overall, governments have cut jobs in 10 of the past 12 months.

Tax collections by state and local governments have been rising since mid-2009. Yet the belt-tightening continues. From January through March, government cuts reduced U.S. economic growth by 0.78 percent point to an annual pace of just 1.9 percent.

"Typically, the government offers a base level of support" when the economy is weak, says Scott Brown, chief economist at Raymond James & Associates.

"In this case, the government is actually contributing to the weakness of the recovery. ... You're talking about teachers getting laid off. Government worker have families. They have mortgages. They spent their paychecks."

— Paul Wiseman, AP Economics Writer

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CONSIDER THE 'EMPLOYMENT RATE'

To assess the job market, most people look at the unemployment rate. But it can be misleading. The rate can fall, for example, even if hiring is weak.

This can happen when many people stop looking for work and are no longer counted as unemployed. The rate can also rise even when jobs are created, if more people start looking. The number of unemployed often rises. That's what happened in May.

Then there's the "employment rate." It measures the percentage of adults who do have jobs. And it's painting a more sobering picture.

Consider: The unemployment rate has dropped almost a full percentage point from August, from 9.1 percent to 8.2 percent. That might suggest the job market is steadily strengthening. Yet the employment rate has improved only slightly in that time, from 58.3 percent to 58.6 percent. That's lower than when the recession ended, when it was 59.4 percent.

So why the difference? The economy has added jobs since August — but only about enough to keep up with population growth and prevent the unemployment rate from rising much.

— Christopher S. Rugaber, AP Economics Writer

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EUROPE STILL WORSE

As bad as the May employment numbers were, Americans can take solace from one thing: It's a lot worse in Europe.

Unemployment in the 17 countries that use the euro currency hit 11 percent in April, the highest since the single currency was introduced in 1999, the European Union's Eurostat office reported Friday.

"Europe would gladly trade places with the U.S.," says Josh Feinman, global chief economist of DB Advisors.

But Europe's problems are likely to pinch America too, by denting U.S. exports to Europe and rattling financial markets. And should the U.S. economy, the largest in the world, weaken further, that would further damage economies in Europe and Asia.

— Paul Wiseman, AP Economics Writer

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COAL WORKERS SQUEEZED

A warm winter that cut electricity demand and decade-low natural gas prices have led to tough times for the coal industry. Demand for coal in the U.S. is projected to drop to the lowest level since 1992 this year.

In response, coal companies are cutting back, especially in West Virginia and Kentucky, where relatively expensive coal is produced. Patriot Coal, based in St. Louis, has laid off 1,000 workers this year.

Alpha Natural Resources, based in Bristol, Va., announced in February it would idle four mines and lay off 320 workers. Earlier this month, it announced it would idle another mine and slow production at one more, cutting 133 more jobs.

— Jonathan Fahey, AP Energy Writer

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COUCH-SURFING

The job market remains tough even for the very educated or very experienced. Erica Johnson, 33, calls herself a "couch-surfing Ph.D." because she's been sleeping on sofas in the homes of friends and relatives in Lexington, Ky. Armed with a doctorate in education policy, she'd like to work as a college administrator.

But most management jobs she's pursued require more experience. Yet she's considered over-qualified for lower-level jobs.

"There aren't a lot of mid-level openings," Johnson said, after many states have cut education budgets.

Phil Allen, 48, a PR professional in suburban Chicago, says he's had 70 job interviews in the past year. He gave a 20-minute presentation as part of an all-day interview for one opening this spring and left thinking, "There's no way I'm not going to get this job."

"But I didn't get it," he said. "That's kind of a crushing thing."

— Christopher S. Rugaber, AP Economics Writer

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SLOW RECOVERY

Nearly three years into the recovery, hiring remains weak by every historical standard.

Consider what happened when companies slashed jobs in the 1981-82 recession. In September 1982, layoffs ran at an annual rate topping 4 percent. But the economy rebounded explosively. And job growth followed. By February 1984, 15 months after the recession had ended, hiring was occurring at a 6.5 percent annual pace.

During the Great Recession, job cuts were even steeper. They occurred at a 6 percent to 7 percent annual rate in the winter of 2008-09. Yet since the recession officially ended in June 2009, job gains have been fitful. Hiring has only recently topped 2 percent of total payrolls — just one-third the pace after the 1981-82 recession.

What's going on this time?

Mainly, the economy is too weak to drive more job growth. Consumers are still cautious about spending. And the housing sector is still weak. Both are weighing on the economy more than in previous recoveries.

— Christopher S. Rugaber, AP Economics Writer