Weak US Job Growth Threatens World Economy

English: President Barack Obama talks with Chinese President Hu Jintao during the morning plenary session of the G-20 Pittsburgh Summit at the David L. Lawrence Convention Center in Pittsburgh. (Photo credit: Wikipedia)

The world's economic outlook darkened on Friday as reports showed U.S. employment growth slowing sharply, Chinese factory output barely growing and European manufacturing falling deeper into malaise. In a shock that sent global markets into a dive, the U.S. economy added just 69,000 new jobs in May, less than half what analysts expected. Readings for the prior two months were also revised down, while the unemployment rate rose for the first time in almost a year, to 8.2 percent.

The Labor Department report dealt a blow to confidence in the U.S. economic recovery, which until recently had contrasted with Europe’s deteriorating economic situation and seemingly intractable political crisis over government budget deficits.

“It certainly suggests that perhaps the softness in Europe is either influencing the U.S. or that the U.S. recovery may not be strong enough to overcome the softness in Europe,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

The jobs numbers were likely to create a political headache for President Barack Obama ahead of the presidential elections in November, and strengthen the case for another round of stimulus from the Federal Reserve ... Continue to read.

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