WASHINGTON -- American employers hired at the slowest pace in nine months in March, a sign that Washington's austerity drive could be stealing momentum from the economy.
The economy added just 88,000 jobs last month and the jobless rate ticked a tenth of a point lower to 7.6 percent largely due to people dropping out of the work force, Labor Department data showed on Friday.
Analysts polled by Reuters had expected a gain of 200,000.
The slower pace of growth in payrolls marks a steep reversal of the recent trend in which the labor market appeared to be stepping up its pace of recovery. It also comes after Washington increased taxes in January and just as across-the-board federal budget cuts began in March.
"When you get to numbers below 100,000, you have to start worrying," Paul Dales, an economist at Capital Economics in London, said before the data was released.
The slowdown in job growth could make policymakers at the Federal Reserve more confident about continuing a bond-buying stimulus program. Discussion at the central bank has been growing over whether to dial back the purchases, perhaps as soon as this summer.
Analysts have noted that the federal spending cuts have only just begun and will be a more substantial drag on the economy between April and June, when many government workers begin taking days off work without pay.
Government payrolls fell only 7,000 in March, reversing the 14,000-job gain from February.
Fed Chairman Ben Bernanke, who has said the labor market must show sustained improvement before monetary stimulus is eased, has voiced concern about the spending cuts.
The jobless rate fell as the labor force shrank by 496,000 people. The unemployment rate is derived from a survey of households which is separate from the survey of employer payrolls. The household survey actually showed employment fell by 206,000 in March.
The drop in the labor force sent the share of the population that is either employed or looking for work to 63.3 percent, its lowest since 1979.
Reporting by Jason Lange; editing by Andre Grenon.
10 Reasons Why You're Not Feeling Better About the Economy
Employers Added 88,000 Jobs in March, Far Fewer Than Expected
Nationally, the average gas price hit a recent high of $3.74 per gallon, nearly $0.50 higher than it was on Jan. 1. According to website GasBuddy.com, that's about a 14 percent increase since the start of the year.
The start of the new year also marked the end of the temporary 2 percentage point tax break on Social Security contributions. Once that part of President Obama's stimulus package expired, your paychecks went back to being 2 percent smaller. For the average family, that adds up to about $1,000 a year.
That same "average family," by the way, already earns only about $50,000 a year today. And according to CNN, that's about $4,000 less than you were earning in 2000.
A disconcerting report from Sallie Mae last week showed that about one-third of Americans working toward retirement are having to raid their retirement savings to pay for their kids' college educations.
According to a poll commissioned by Bankrate.com (RATE) in February, only 55 percent of Americans have enough money tucked away in their savings accounts and "emergency funds" to cover the amounts owed on their credit cards.
That Bankrate poll also revealed that among women in particular, 51 percent actually owe more on their credit cards than they have cash in the bank. Digging deeper into the data, Bankrate reported that while high earners are doing well, and generally flush, most people (59 percent) who earn less than $30,000 annually owe more on their cards than they have in savings. And these are the people least able to afford the high cost of credit card interest.
Speaking of earnings -- and jobs -- the same unemployment report that set Wall Street to cheering Friday can be looked at from a glass half empty perspective as well. The new, lower unemployment level of 7.7 percent is the best number we've seen since the Great Recession ended. However, The Wall Street Journal points out that 7.7 percent is very close to the worst unemployment ever got (7.8 percent) in the 1991 recession. Our best number in years is within a whisker of the worst they faced back then.
The overall workforce participation rate -- the percentage of Americans currently earning wages at all -- currently stands at just 63.5 percent. According to the Bureau of Labor Statistics, that's much worse than what we saw in the 1991 recession. It's the lowest we've seen since the recession that hit during the Carter administration.
Little wonder, then, that according to the Bankrate survey, people are increasingly concerned about "job security." Friday's unemployment report may suggest that the jobs market is on the mend, but most people (59 percent) say they feel no more or less confident in their employment situation today than they did a year ago. Among those polled whose opinions have changed, 23 percent said they feel "less secure today" than they did a year ago, versus 19 percent who feel more secure.
That doesn't exactly jibe with the story that things are getting better.
It's great news for folks who own stocks, no doubt, and according to the Journal , more than 90 percent of people earning $100,000 or more do. But what about the rest of us? Fewer than 46 percent of Americans earning less than $50,000 are invested in the stock market -- and remember, "$50,000" is the average income in America today.
So yes, It turns out for the average American, things may not be getting better at all.