U.S. job growth ground to a halt in August as government layoffs erased meager gains in the private sector. The Labor Department says American businesses added only 17,000 jobs last month, far short of the 100,000 jobs analysts were expecting. To make matters worse, cuts in state and federal employment offset those gains. The net result - zero jobs added in August.
The outlook for unemployed Americans remains dim following the weakest employment report in nearly one year. Analysts say a two-week strike by a major wireless phone company may have skewed the numbers. But even with the national unemployment rate holding steady at 9.1 percent, James Bianco at Bianco Research said there is little good news in the latest government report.
"Even if you account for the Verizon strike, which was 48,000 workers, and sort of added that back in, it's still not a good number. It paints an economy that is decelerating and it paints a job market that continues to slow dramatically over the summer," said Bianco.
U.S. stocks fell on the weak jobs report - as did nervous markets from Asia to Europe.
In Italy, where top economic experts gathered Friday to talk about the prospects of a global recovery, the assessments were predictably grim.?
Nouriel Roubini, an economics professor at New York University, said, "I do not expect a global recession, I do not expect a recession in fast-growing emerging markets, but the economic data from the United States, from most of the eurozone, from the United Kingdom, suggests that we may have an economic contraction."
Economists say slow growth in the U.S. and the debt crisis in Europe has dramatically increased the chances of another painful downturn.
That puts even greater pressure on Washington, where President Barack Obama will announce a major jobs initiative on Thursday, September 8 before a joint session of Congress.
Gene Sperling, director of the White House National Economic Council, said the president's proposals are significant and deserve bipartisan support.
"People will see that in the areas he discusses, on tax cuts for workers and small businesses, strategies for the unemployed, jobs to rebuilding America, that these are the types of things that have been historically deserving of bipartisan support," said Sperling. "And we're going to hope very much, and he's going to urge Congress very much, to put partisanship and politics to the side, and put the economy and workers to the front."
With a general election just 15 months away, investors are not feeling very optimistic.