WASHINGTON — Hiring may be slowing after months of healthy job gains that helped drive economic growth.
The government’s May jobs report, to be released today, is expected to cement evidence that the economy has weakened in the face of high energy prices, scant pay raises and a depressed housing market. Analysts have been rushing to scale back their forecasts for job creation.
Despite those worries, the government has shifted away from economic stimulus and is focused on debt reduction. The Federal Reserve isn’t expected to take any further steps to spur growth.
“There are reasons to be worried,” said Michelle Meyer, an economist at Bank of America Merrill Lynch. “It appears there’s not much desire to do more in Washington, even as the economy weakens.”
Higher gas prices have left less money for consumers to spend on other purchases, such as furniture, appliances and vacations. And average wages aren’t even keeping up with inflation. As a result, consumer spending, which fuels about 70 percent of the economy, is growing sluggishly.
A slowdown in hiring could weaken the economy for the rest of year, even as temporary factors — such as the disruptions from the Japan earthquake — fade.
“We do believe there’s a slowdown in the underlying momentum of the economy,” Meyer said.
So what happens now? In the short run, at least, not very much.
Many economists think the nation would have to start losing jobs again before the Federal Reserve would be willing to pump more money into the economy.
Signs of trouble
More evidence of the economy’s weakness surfaced Thursday:
• The number of people applying for unemployment benefits remains stuck at a level that signals weak job growth.
• Factories received fewer orders for computers, autos, industrial machinery and other goods in April.
• Small businesses are hiring less. May marked a second month of weakness after solid gains in February and March.
