Economy adds 88,000 jobs in March, unemployment down to 7.6 percent

The nation's economy added 88,000 jobs in March, a figure far below expectations that is likely to trigger new doubts about the strength of the economy. 

While the unemployment rate fell to 7.6 percent, that reflected 496,000 workers leaving the workforce, not a strengthening labor market. The 63.3 percent labor participation rate is the lowest since 1979.

Analysts had expected job gains near 200,000 in March. 

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The report released Friday by the Bureau of Labor Statistics is likely to renew a debate in Washington about the direction of the economy. 

Republicans seized on the numbers to criticize President Obama, with House Majority Leader Eric Cantor (Va.) quoting a former Obama economic adviser to describe the figures as a "punch to the gut."

"Today's jobs report is disappointing," Cantor said in a statement. "Our economy is not creating enough jobs, and too many working men and women are still in the unemployment line. 

“For months, we've heard plenty of excuses from the White House and Congressional Democrats for why unemployment remains high. It's time to stop making excuses and start working together on common sense solutions to address our lingering unemployment problem, and the stagnant economy," Cantor said.

The Obama administration said the slow growth is likely the result of the sequester — the $85 billion in automatic spending cuts that began on March 1.

Alan Krueger, chairman of the White House Council of Economic Advisers, said he doesn't "think the bigger picture is any different" on the economy, despite the March data.

"If Washington will avoid policies that will slow us down, like the sequester, the economy will continue to recover," he said on MSNBC. 

He called the sequester a "slow grind" that could lead to the loss of 750,000 jobs, according to a Congressional Budget Office analysis. "That's why the president is trying to replace the sequester with a more balanced approach," he said.

The March figures represent the slowest job growth in nine months. Retailers and manufacturers were among the sectors reducing employment. Overall, private-sector employers added 95,000 jobs, while governments continued to shed workers.

March's disappointing figures follow a strong January and February. The March report included revised figures for those months, with January's job gains being increased to 148,000 and February's to 268,000 jobs. 

Over the past several years, strong employment in the first months of the year has been followed by a drop-off in employment in the spring. The March report is likely to raise questions about whether the economy faces another spring slowdown.

Mark Zandi, chief economist at Moody's Analytics, said the jobs figure reflects that the economy is "still not gaining traction, it's not taking off."

While Zandi said a regular spring swoon could be caused by seasonal adjustment issues in the data, the economy has been hit the last few springs by a range of outside forces, from the Japanese tsunami in March 2011 to the persistent European debt crisis over the past two years. 

Although Zandi said he doesn't think the March numbers reflect the sequester cuts, he said the economy will feel the ill effects heading into the summer.

Other factors to watch include a temporary payroll tax cut that was not extended at the beginning of the year, which took more stimulus from the economy. Tax rates on households with incomes above $450,000 also were hiked as part of an end-of-year deal.

—This story was updated at 10:45 a.m.