Bleak jobs report spells trouble for Obama re-election

WASHINGTON Fri Jun 1, 2012 3:39pm EDT

U.S. President Barack Obama speaks before signing the reauthorization of the Export-Import Bank at the White House in Washington May 30, 2012. REUTERS/Kevin Lamarque

U.S. President Barack Obama speaks before signing the reauthorization of the Export-Import Bank at the White House in Washington May 30, 2012.

Credit: Reuters/Kevin Lamarque

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WASHINGTON (Reuters) - A grim jobs report put President Barack Obama on the defensive over the weak economy on Friday with Republican opponent Mitt Romney quickly seizing on what he called "devastating news" on the top issue for American voters.

The jobless rate ticked up to 8.2 percent in May from 8.1 percent in April and only 69,000 jobs were added during the month, presaging a possible summer economic dip. The jobs report provided a reminder of the political challenges Obama faces as he seeks to convince Americans to give him a second term on November 6.

A White House statement argued that the economy is still recovering from a severe financial crisis that Obama inherited from his Republican predecessor, George W. Bush, who left office in January 2009.

"Problems in the job market were long in the making and will not be solved overnight," said chief White House economist Alan Krueger. "The economy lost jobs for 25 straight months beginning in February 2008, and over 8 million jobs were lost as a result of the Great Recession. We are still fighting back from the worst economic crisis since the Great Depression."

Romney, who touts his experience as a former private equity executive for why he would handle the economy better than Obama, called the May jobs report proof that Obama's economic policies are failing.

"Slow GDP (gross domestic product) growth, plunging consumer confidence, an increase in unemployment claims and now another dismal jobs report all stand as a harsh indictment of the president's handling of the economy," the former Massachusetts governor said in a statement.

Obama, who was visiting a Honeywell facility in Minnesota to demonstrate his commitment to job growth, thus far has been holding his own against Romney, who has clinched the Republican nomination to face Obama.

In the race for the 270 electoral votes needed for election, Obama is favored in states that would provide him a total of 237 to Romney's 170, according to an estimate by RealClearPolitics.com.

But the jobs report was likely to feed more doubts about whether he has the right policies in place to address an economy still sagging from weak growth, high government debt, tight credit at banks for small businesses, and strong competition from China.

'EVEN SLOWER'

"The May jobs report indicates growth could be even slower in the second quarter, and the economy is dangerously close to stalling and falling into recession," said University of Maryland economist Peter Morici.

There were also concerns that the labor report foreshadowed a summer economic swoon amid fears Europe's financial crisis will hit the United States, where the stock market has already been reeling.

"The worst part about this jobs report is that it was the last chance for a decent report before the full consequence of the slow-moving European implosion really starts to influence the global and economies," said Matt McDonald, an analyst at Hamilton Place Strategies.

And it will likely lead to an intensifying campaign battle, and a potentially more negative one, in economically hard-hit election battleground states like Ohio, Florida and Nevada and even Pennsylvania, which usually votes for the Democrat.

Romney has staked his claim to the presidency by playing up his experience at private equity firm Bain Capital, but the Obama campaign has sought to undermine his argument by pointing out some companies Bain invested in ended up losing jobs while profiting nonetheless.

The strategy thus far, however, has had limited impact on Romney. Despite a hard-fought primary battle with his Republican rivals, he is running neck and neck with Obama in national surveys of voters and is near even with him in battleground states like Iowa, Colorado and Nevada.

The Republican was in no position to take maximum advantage of the jobs report. Rather than visiting a swing state, he woke up in California, fertile ground for raising campaign cash but an odds-on favorite to go Democratic as usual in November.

(Additional reporting by Patricia Zengerle; Editing by Mary Milliken and Will Dunham)

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