By Vicki Needham - 09/07/12 08:55 PM EDT
The economy added 96,000 jobs in August, a paltry figure that threatens to undermine President Obama’s case for a second term as he tries to carry forward momentum from the Democratic National Convention.
The unemployment rate fell to 8.1 percent from 8.3 percent, according to the Bureau of Labor Statistics, but only because more people gave up on looking for work. Economists had expected upwards of 150,000 new jobs last month.
The news couldn't have come at a worse time for Obama, arriving the morning after he made his case for reelection to a prime-time television audience. The president acknowledged dissatisfaction with the economy during his acceptance speech Thursday night but pleaded with voters for more time, arguing he inherited a mess that couldn’t be solved in one term. "It will take more than a few years for us to solve challenges that have built up over decades," he said.
Republicans, led by presidential nominee Mitt Romney, pounced on the dour employment report and said it proves Obama’s policies have failed the country.
“If last night was the party, this morning is the hangover,” Romney said.
“For every net new job created, nearly four Americans gave up looking for work entirely. This is more of the same for middle class families who are suffering through the worst economic recovery since the Great Depression."
Meanwhile, the two-month sprint to Election Day has begun in earnest. Obama and Romney are both campaigning in New Hampshire and Iowa, seeking to break the deadlock in national polling that has persisted through two weeks of conventions.
Democrats repeatedly noted during their convention in Charlotte, N.C., that the economy has created more than 4 million jobs since October 2010, but that hasn't been enough to make up for the job losses that occurred during the Obama administration's first 18 months.
Romney hopes to turn the election into a referendum on Obama's handling of the economy; he points to the president's "you didn't build that" remark as evidence he's hostile to private enterprise. Addressing a crowd Friday afternoon in northwestern Iowa, Romney said the August numbers were "simply unimaginable."
"The president said by at this point we'd be at 5.4 percent unemployment ... had his policies worked as he thought,” Romney said.
Obama sought to put a positive spin on the report at his first campaign stop since his acceptance speech, saying it was still the 30th month of consecutive growth during his administration.
"Today we learned that after losing about 800,000 jobs when I took office, business once again added jobs for the 30th month in a row — a total of more than 4.6 billion jobs," Obama said in Portsmouth, N.H. "But that's not good enough. We know it's not good enough. We need to create more jobs faster. We need to fill the hole left by this recession faster. We need to come out of this crisis stronger than when we went in. And there's a lot more that we can do."
But the GOP ticket said it's clear that voters aren't better off than they were four years ago.
"This is not even close to what a recovery looks like," Romney's running mate, Rep. Paul RyanPaul RyanOvernight Finance: IRS hiring hundreds of new tax enforcers ‘It’s a King Kong vs. Godzilla kind of race’ Boehner returns to the spotlight MORE (R-Wis.), said.
"[Obama's] great at giving speeches, he's good at making promises ... if you take a look at his record, it just doesn't hold up," Ryan said. "We need to stop this notion of a government-driven economy.
There was more bad news in the August data. Job-growth figures for June and July were lowered — down to 45,000 from 64,000 and to 141,000 from an initially estimated 163,000, respectively. Participating in the labor force, meanwhile, fell to 63.5 percent in August, the lowest level since September 1981 and a major reason why the unemployment rate declined.
"I did the arithmetic, per Bill ClintonBill ClintonVictorious Trump attacks Clinton on NAFTA The Trail 2016: Indiana gets ugly on GOP judgment day Clinton: ‘Reservation' remark wasn’t about Bill MORE's suggestion. For every net new job in August, nearly 4 people stopped looking for work," wrote top Romney adviser Eric Fehrnstrom on Twitter.
Mark Zandi, chief economist with Moody's Analytics, called the figures a "disappointment" and said an unexpected loss of manufacturing jobs skewed the numbers, sending them below 100,000.
Some of the reluctance among employers to expand their payrolls could stem from fears about the congressional lame-duck session after the election, which is loaded with tax and spending decisions that will have a huge impact on business.
"The greatest challenge to getting Americans back to work is the uncertainty facing our nation," House Majority Leader Eric CantorEric CantorRepublicans who vow to never back Trump NRCC upgrades 11 'Young Guns' candidates Cruz, Kasich join forces to stop Trump MORE (R-Va.) said.
The painfully slow growth of the labor market could spur the Federal Reserve to take action at its policy meeting this month. Fed Chairman Ben Bernanke said a week ago that the "stagnation of the labor market in particular is a grave concern" for the central bank.
But no matter what action the Fed takes, the state of the economy is unlikely to change significantly before the election.
—Alicia M. Cohen, Daniel Strauss and Justin Sink contributed to this report.
This story was first posted at 8:31 a.m. and has been updated.