US economy sheds 131,000 jobs

Aug 6th, 2010 | By admin | Category: Featured

Obama’s Republican opponents leaped on the data as evidence that massive economic stimulus spending had not worked.

“President Obama’s economic policies have failed to create sustainable job growth,” said Republican National Committee chairman Michael Steele.

The White House pointed to the distance traveled since the depths of the recession.

“We have made substantial progress from the days when employment was declining by 750,000 a month,” said Christina Romer, President Barack Obama’s top economic advisor.

While she admitted, “there will likely be more bumps in the road ahead as the economy recovers,” she dismissed suggestions by some economists of a potential double-dip recession.

On Wall Street, markets reacted gloomily, with the major stock indices all trading down.

For months investors have anxiously awaited any clue of where the economy is headed, with data frequently providing a confused snap shot.

That trend appears to have continued, leaving Obama and policy makers facing tough choices about whether new crisis measures are needed.

The Federal Reserve’s rate-setting panel meets on Tuesday, when it is expected to ponder restarting stimulus policies.

But most analysts agree the central bank will shy away from any new measures unless absolutely necessary, to avoid using one of their few remaining policy levers.

“The central bank’s problem now is that any additional monetary stimulus will require unconventional methods,” said Ryan Sweet of Moody’s Economy.com “and the cost and benefit trade-off of these are unclear.”

But Friday’s report prompted calls for the Fed to keep record low interest rates.

“The Fed should remain dovish,” said analysts at Societe Generale.

© 2010 AFP

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