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Saturday, June 4, 2011

Chief US Economist : “economy clearly just hit a brick wall”

After several months of strong job growth, hiring in the United States slowed sharply in May, suggesting the economy may be running out of steam once again.

The Labor Department reported on Friday that the nation added 54,000 nonfarm payroll jobs last month, after an increase of about 220,000 jobs in each of the three previous months. The gain in May was about a third of what economists had been forecasting. The unemployment rate, meanwhile, edged up to 9.1 percent from 9.0 percent in April. 

“The economy clearly just hit a brick wall,” said Paul Ashworth, chief United States economist at Capital Economics. “It’s almost as if it came to a complete standstill.”

While most analysts do not believe that the country will slide back into a recession — which would technically mean that the economy would start shrinking again — they acknowledge that with such low levels of hiring, the recovery is barely perceptible to many Americans.

In Washington, today’s hiring challenges have been receiving less attention than tomorrow’s fiscal ones. But a week of dismal news on manufacturing, housing and car sales may shift the discussion. Some pressure is building on the Obama administration and Congress to delay federal spending cuts, which economists say will weigh down the fragile recovery. Liberal groups have renewed their calls for more aid to the states and more aggressive action from the Federal Reserve. (Continues at NYT)

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