Job Growth Chills In Spring After Thawing In Winter

Spring usually means a thaw, but that's not the case for the U.S. job market.

The burst of hiring that came last winter, which raised hopes the job market was improving, apparently was just a short reprieve in the slowest recovery in six decades.

As the state of the recovery and the health of the job market increasingly dominate the presidential election campaign, the numbers aren’t good news for the White House.

Overall, U.S. payrolls added 115,000 new workers in April, according to the Bureau of Labor Statistics. That's well below market estimates which hovered around 160,000. It's even below March's disappointing number, which was revised upward to 154,000. February's non-farms payroll number was also revised higher.

Economists noted that the jobs data over the past six months has likely been skewed by unseasonably warm weather, which tended to boost payrolls in some industries that usually are slow to hire in the winter. That may have depressed the hiring data in the spring. If so, the data would show a modest rise in the pace of hiring later this year.

But it seems clear that the series of strong numbers late last year, when the economy created roughly a quarter of a million jobs a month, aren’t likely to resume until the pace of the anemic recovery picks up speed.

“It now appears that jobs have decelerated into line with GDP, rather than GDP accelerating to catch up with jobs,” said Nigel Gault, an economist at IHS Global Insight.

On Friday, the Obama administration sought to argue that the glass is half full: the economy continues to move ahead, though more slowly than voters would like.

"We see a picture of the economy healing," Alan Krueger, chairman of the White House Council of Economic Advisers, told CNBC. "Given the problems that the economy has had over the past decade, we need faster growth. We have a very large jobs deficit, we are making progress."

For the White House, the best news in the report was a slight drop in the unemployment rate to 8.1 percent. But that downward move masked a more troubling long-term trend.

As Obama's rival for the Oval Office, former Massachusetts Republican governor Mitt Romney, was quick to point out, the rate fell because a growing portion of the population - the biggest share since 1981 - has left the work force altogether.

"This is way off from what should be happening in a normal recovery," Romney said on Fox & Friends. "You have more people dropping out of the work force than you have getting jobs."

"This is not progress," he said.

With job prospects weak, an estimated 342,000 people left the work force in April. Some were eliminated from the official government count because their emergency unemployment benefits have run out. With fewer people telling the government they’re looking for work, the percentage of those counted as unemployed fell by a tenth of a percent.

“We need a lot better job gains if the unemployment rate is to keep coming down,” said economist Joel Naroff at Naroff Economic Advisors.

The shrinking U.S. work force also acts as a drag on the economy's overall potential to grow. Those sidelined workers aren’t contributing to the growth in production of goods and services. And without a paycheck, they’re not able to boost consumer spending – which accounts for about two-thirds of the U.S. economy.

Friday’s report also highlighted another political fault line over proposals to spur faster growth and hiring. Private companies added 130,000 workers in April, while government spending cuts shrank public sector employment by 15,000.

Those government cuts are small compared to the spending contraction that looms at the end of the year unless Congress defers some or all of the more than $1 trillion in budget cuts that will begin to take effect in the new year.

Republicans argue that shrinking the government will spur business expansion and promote more hiring. But Democrats point to the recession sweeping Europe, where governments are slashing spending to the bone in response to an ongoing debt crisis.

“We’re seeing it in Europe big time and we’re seeing it here as well now,” said University of Chicago professor Jared Bernstein, a former White House economist. “This austerity stuff is absolutely hurting us.”

The weakening job market comes amid other signs that an already modest economic recovery is losing steam. Last week’s initial estimate on the pace of growth in the first quarter shows that gross domestic product expanded at an annual rate of just 2.2 percent – down from 3 percent in the last three months of the year.

Besides the ongoing cuts in government spending, the GDP slowdown was marked by a pullback in spending and investment by businesses.

As businesses and governments al all levels cut back in the first quarter, consumer spending has held up relatively well. But Friday’s jobs report showed that the average paycheck for newly-hired workers is not keeping up with inflation.

Weekly earnings in April were up 2.1 percent year-over-year, the slowest increase since February 2010. But the consumer price index, boosted in part by rising gasoline prices, is running 2.7 percent higher than last year.

“Everything remains in a holding pattern of slow labor-market improvement, and that includes the cost of hiring these new workers,” said Cornell University labor economist Linda Barrington.

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