Sept. 6 - The August jobs report is the latest sign that the U.S. economy is struggling to regain momentum as fewer people search for jobs. Fred Katayama reports.
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New signs the U.S. economy is struggling to regain its mojo. It added just 169,000 jobs last month. And it cranked out a lot fewer jobs in June and July than previously thought. What's more, the biggest gains came from lower quality jobs that dole out low wages, such as retail and food services.
The unemployment rate fell to 7.3 percent but that was because more people gave up looking for jobs. That labor participation rate dropped to its lowest level in 35 years.
Cary Leahey, chief U.S. economist at Decision Economics:
SOUNDBITE: CARY LEAHEY, CHIEF U.S. ECONOMIST, DECISION ECONOMICS (ENGLISH) SAYING:
"That is the reason the Fed is doing what they're doing in the belief that the longer you remain unemployed, the harder it is to get back into the market. You don't even enter the labor force. I don't see that changing any time soon."
This was the last jobs report before the Fed meets in less than two weeks to decide whether or not to trim its massive bond purchasing program that has goosed the economy. This Goldilocks report was neither extremely weak or strong, making the job tougher for Ben Bernanke's Fed to decide whether it should start tapering its stimulus program this month. The minds on Wall Street were split as well.
Bianco Research president Jim Bianco says the weak report will prompt the Fed to hold off for now.
SOUNDBITE: JAMES BIANCO, PRESIDENT, BIANCO RESEARCH (ENGLISH) SAYING:
"I don't think there's anything that would prompt the Fed to start tapering. The numbers came in a little weaker than expected. The revisions to June, July were a bit of a disappointment as well. Yes, the unemployment rate dropped, but that was from the fall in the participation rate. So this shouldn't really get the Fed to move at this point."
But John Manley, chief equity strategist at Wells Fargo Advantage Funds, argues otherwise.
SOUNDBITE: JOHN MANLEY, CHIEF EQUITY STRATEGIST, WELLS FARGO ADVANTAGE FUNDS (ENGLISH) SAYING:
"We are still creating jobs, which is a good thing, too. It makes tapering much less likely to happen in a big way. We can't rule out some. I might argue at little bit of tapering this month might be better than none at all."
Investors initially bet the Fed would hold off, driving stocks higher. And the yield on the benchmark Treasury note backed off from the 3 percent level it had hit Thursday.
Besides the labor report and the upcoming Fed meeting, investors have another job on their hands: weighing the prospect of a strike on Syria, a fear that has been rattling the markets.
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