Obama Appeals for Patience on Economy After Dismal Jobs Report

Job seekers line up at the 10th annual Skid Row Career Fair held at the Los Angeles Mission in downtown Los Angeles June 2. (AP)

President Obama said Friday there will be "bumps on the road to recovery," as he appealed for patience on the economy following a government report that showed the pace of hiring slowed dramatically last month.

The report, which showed the unemployment rate rose to 9.1 percent, fueled Republican demands that the Obama administration change direction on its economic policy. But the president, addressing auto workers at a Chrysler plant in Ohio, said it will continue to take time for the economy to heal after such a massive shock in 2008.

"There's still some headwinds that are coming at us," he said. "There are always going to be bumps on the road to recovery. We're going to pass through some rough terrain." He expressed optimism that the economy would eventually turn around.

According to the Labor Department report Friday, employers hired just 54,000 new workers in May, the fewest in eight months. The numbers follow a string of other reports showing a slowdown in manufacturing and deepening slump in the housing market.

The trendlines come at a bad time for Obama, as the official field of 2012 Republican presidential candidates starts to take shape; the candidates are eager to make the economy a central plank in their campaigns.

"President Obama's policies made the recession worse and as a result more people are out of work," former Massachusetts Gov. Mitt Romney, who announced his jobs-centered White House bid Thursday, said after the report was released.

Republicans continued to hammer Obama with an infamous chart pushed by his administration during the 2009 stimulus debate which predicted unemployment would stay below 8 percent and that, by this time, the rate would be below 7 percent.

Instead, the pace of hiring has weakened dramatically from the previous three months, when the economy added an average of 220,000 new jobs. Private companies hired only 83,000 new workers in May -- the fewest in nearly a year. Local governments cut 28,000 jobs last month, the most since November.

As lawmakers wrestle with next year's budget, as well as a long-term plan for reducing the deficit and an elusive deal to raise the debt ceiling, the report fueled political fingerpointing on both sides.

Senate Democratic Leader Harry Reid said Friday that Republicans have been "distracted" from the challenge of creating jobs by pushing a plan to overhaul Medicare, which he claimed was a vehicle to "pay for more tax breaks for millionaires."

But Republicans have accused Democrats of demagoguing on the Medicare issue without offering a plan of their own. In light of the Labor report, they blamed Democratic spending policies for the sputtering recovery.

"One look at the jobs report should be enough to show the White House it's time to get serious about cutting spending and dealing with our ailing economy," House Speaker John Boehner told reporters.

House Republicans urged the White House to tackle the national debt, reduce the regulatory burden and pursue tax reform to help businesses. These changes, they said, would persuade employers to start spending and hiring.

The White House urged lawmakers not to read too much into any one monthly jobs report. Council of Economic Advisers Chairman Austan Goolsbee said the unemployment rate is "unacceptably high" but noted the private sector added more than 2 million jobs over the past 15 months, claiming administration policies like a temporary payroll tax cut helped.

"There are always bumps on the road to recovery, but the overall trajectory of the economy has improved dramatically over the past two years," he said in a statement. "This report is a reminder of the challenges that remain."

Stock futures plunged after the report was released.

Local governments cut 28,000 jobs last month, the most since November. Nearly 18,000 of those jobs were in education.

Cities and counties have cut jobs for 22 straight months and have shed 446,000 positions since September 2008.

More people entered the work force last in May. But most of the new entrants couldn't find work. That pushed the unemployment rate up from 9.0 percent in April. The number of unemployed rose to 13.9 million.

And the government revised the previous months' job totals to show 39,000 fewer jobs were created in March and April than first thought.

The weakness in hiring was widespread. Manufacturers cut 5,000 jobs, the first job loss in that sector in seven months. That included a drop of 3,400 jobs in the auto sector. Several Japanese car makers reined in production due to supply disruptions stemming from the March 11 earthquake.

Retailers cut 8,500 positions, after adding 64,000 in April. And leisure and hospitality which includes restaurants and hotels, cut 6,000 jobs. That came after they added an average of 43,000 in the previous three months.

The Associated Press contributed to this report.