Slower job gains stir doubts about recovery, Obama reelection bid


WASHINGTON — Job growth slowed sharply last month, raising fresh questions about the strength of the recovery and complicating, for the moment, President Obama’s ability to run for reelection on the wave of a resurgent economy.

Employers nationwide added a modest 120,000 new positions in March, only about half the job gains in each of the previous three months, the Labor Department reported Friday. Some of the falloff, analysts said, reflected the fact that payrolls had been inflated in the winter because of unusually mild weather.

But the magnitude of the deceleration came as a disappointment to analysts, investors and politicians — and gave rise to the distinct possibility that hiring in the next few months could be relatively tepid.

“It raises the specter, ‘Are we back to where we’re just hanging on again?’” said Heidi Shierholz, a labor economist at the Economic Policy Institute, a liberal think tank in Washington.

The nation’s jobless rate dipped to 8.2% last month from 8.3% in February, but economists said the decline reflected workers’ dropping out of the labor force rather than a strengthening economy. Last month, the labor force shrank by 164,000, with the decrease attributable to female workers.

The falling percentage takes Obama closer to an unemployment rate of 8% — an important political marker. Republicans, including likely November opponent Mitt Romney, have frequently criticized his policies and his one-time prediction that unemployment would fall below 8%.

Economists and political scientists warn against using any one economic barometer — let alone a single month’s data — to predict electoral outcomes. But the latest report seemed to re-energize Romney, who declared the data “weak and troubling.”

Obama made only a passing reference to the report Friday as he addressed a White House forum on women and the workforce. He said he welcomed the news of the decline in the unemployment rate. But, as in past months when job growth was much stronger, he struck a tone of cautious optimism.

“It’s clear to every American that there will still be ups and downs along the way and that we’ve got a lot more work to do,” he said.

Yet the latest report raises questions for the president as he nears a critical period in his campaign. Research suggests major economic reports for the three summer months will likely set the tone for voters’ views on the economy, said Henry Brady, a political science professor at UC Berkeley.

“That’s when you really want to have good jobs numbers, when you really want voters to get a sense that things are going well,” he said. “What he can’t afford, I think, is a series of reports that looks like the economy is languishing and allows Republicans to reignite the argument on the economy.”

Financial markets were closed Friday in observance of Good Friday, but stock futures traded sharply lower on the smaller-than-expected job gains. Many economists were forecasting job growth of 200,000 or slightly higher in March.

The unemployment figure has declined by 1.8 percentage points in the last 21/2 years, but other key labor market data suggest that much of the drop is not because people are finding work, but rather that “people are dropping out of the labor force,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

“That’s not a good story,” he said.

Elaine Durson, a 48-year-old substitute teacher in San Diego, has struggled to find a permanent job in recent years. She said she has kept herself afloat financially by taking on side jobs in housekeeping and yard work, and is in a long-term house-sitting arrangement that has allowed her to live rent-free.

“I just quit looking for a while because there was nothing out there,” Durson said Friday. “It’s highly discouraging because I’m never going to get a job as a teacher.”

The drop in the number of women in the labor force last month reflects their greater difficulty in the job market.

Friday’s report showed men garnered most of the job gains last month, as they have since the jobs recovery began in early 2010.

Manufacturing added 37,000 jobs in March — a third of them at auto companies.

Another big reason women have not fared as well is that the public sector has made huge cuts in the last two years, particularly in local education jobs. Women also are facing more competition from men for jobs in healthcare and other fields usually dominated by women.

Government payrolls were essentially flat in March, an encouraging sign that suggests greater stability in local and state finances.

Overall, the unemployment rate for working-age men 16 and older stood at 8.3% in March, unchanged from February but down from 9.5% in August. For women, the jobless figure was 8.1% in March, down from 8.2% in February and 8.5% last August.

The jobless rate, some analysts said, might bounce up a bit in the coming months as more people reenter the job market, but that will be determined by the pace of hiring. The profit outlook for many big companies remains bright. At the same time, analysts are concerned about a slowdown in exports and high gas prices.

In March, retailers shed nearly 34,000 jobs, reflecting the struggles of stores such as Sears and Kmart. Payrolls at temporary-help firms and construction businesses also fell last month, which analysts said was caused in part by inflated weather-related gains earlier in the year.

On the positive side, healthcare employers bulked up their payrolls by 26,000 last month, and the finance sector added 15,000 jobs.

Restaurants and bars added 37,000 jobs in March, but analysts suspect that, too, may have been related to the warm weather and that the sector would likely hold back hiring in the spring.

“It’s possible that the gains we saw over the last few months may be more a reflection of weather than economic reality,” said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. “This latest report is data that this suspicion may be true.”

Times staff reporter Ricardo Lopez contributed to this report.