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 that is generally considered too high to lower the unemployment 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 gasoline 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.
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-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 the past two months.
When applications are above 375,000, it generally means that hiring isn’t strong enough to rapidly lower the unemployment rate.
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 like China and India.