Data: economy failing to spur widespread hiring

WASHINGTON -- The U.S. economy is growing too slowly to pull the job market out of a slump, according to the latest data that suggest June will be another weak month for hiring.

Applications for unemployment benefits stayed above a level last week generally considered too high to lower the jobless rate. And the annual growth rate for the January-March quarter was unchanged at a tepid 1.9 percent.

The two government reports released Thursday added to the picture of an economy that is faltering for the third straight year after a promising start. Job growth has tumbled, consumers are less confident, and Europe's financial crisis has dampened demand for U.S. exports.

Most economists don't see growth accelerating much from the first-quarter pace, although some are hopeful that lower gas prices could help lift consumer spending over the summer.

Growth of around 1.9 percent typically generates roughly 90,000 jobs a month. That's considered too weak to lower the unemployment rate, which was 8.2 percent last month.

Tressa Miller, right, gives military veteran Roger Porter of Detroit some career counseling on his resume in Detroit. The event this week served as a job fair, small business conference, and an open house for military veterans. ASSOCIATED PRESS Enlarge

Slow improvement in the economy threatens President Obama's re-election hopes. He is likely to face voters with the highest unemployment rate of any President since the Great Depression.

The Federal Reserve last week downgraded its outlook for 2012 growth. The Fed now predicts the economy will grow between 1.9 percent and 2.4 percent this year -- a half a percentage point lower than its forecast in April. And it doesn't see the unemployment rate falling much lower this year.

Hiring isn't likely to improve in June, based on the level of people applying for unemployment benefits.

Weekly applications fell only slightly last week to a seasonally adjusted 386,000, the Labor Department said. Applications have climbed nearly 5 percent in two months.

When applications are above 375,000, it generally means hiring isn't strong enough to rapidly lower the unemployment rate.

"Jobless claims are still too high and show that employment growth is slowing and no progress is being made," said Jennifer Lee, an economist at BMO Capital Markets.

Employers added an average of only 73,000 jobs a month in April and May after averaging 226,000 a month in the first three months of the year.

The report on the first quarter's economic growth showed that U.S. corporate profits fell, the first quarterly decline since the final three months of 2008.

U.S. corporations earned less profit overseas, the report said. That's likely a result of Europe's economic woes and slowing growth in countries such as China and India. Lower overseas profits could discourage U.S. employers from adding some jobs in the second half of the year.

"With global weakness continuing ... corporate profits are likely to remain under pressure, a development that is unlikely to help the employment outlook," said Jeremy Lawson, an economist at BNP Paribas.

A closely watched private survey released this week showed consumer confidence fell in June for the fourth straight month. The Conference Board said worries about the job market outweighed lower gas prices and steady improvement in the housing market.