Unemployment Drops to 9.5 Percent as 125,000 Jobs Are Shed in June

The unemployment rate dropped to 9.5 percent for the month of June even as the U.S. government dropped 225,000 Census jobs, the Labor Department reported Friday in another sign that the economy is facing a vulnerable recovery.

Private businesses added 83,000 workers to their payrolls in June, an improvement since May and worse than analysts expected.

The unemployment rate fell as 652,000 people out of work gave up on their job searches and left the labor force. People who are no longer looking for work aren't counted as unemployed.

"The unemployment rate fell to 9.5 percent from 9.7 percent as the 301,000 decline in household employment was more than offset by a drop of 652,000 in the labor force, thus the rate fell not because of a pick up in job gains,' Miller Tabak analyst Peter Boockvar told Fox Business Network.

The nation has 7.9 million fewer private payroll jobs than it did when the recession began in December 2007.

All told, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part time but would prefer full-time work, the underemployment rate edged down to 16.5 percent from 16.6 percent in May.

In responding to the numbers, President Obama said Friday that the Census job losses were a "planned phaseout" and the economy has shown six months of gains of about 600,000 jobs in the private sector, though he acknowledged it was not enough.

"Make no mistake, we are headed in the right direction, but as I was reminded on at trip to Racine, Wis., earlier this week, we're not headed there fast enough for a lot of Americans," he said, speaking at Andrews Air Force Base before boarding Air Force One on his way to a memorial service for Sen. Robert Byrd in West Virginia.

The president then announced that the Commerce and Agriculture departments will invest in 66 new projects across America to build broadband access in areas with little or no access

"In the short-term we expect these projects to create about 5,000 construction and installation jobs across the country," he said. "The long-term economic gains to these communities that have been left behind in the digital age will be immeasurable."

As expected, the report elicited strong criticism from House Minority Leader John Boehner, who has been in a verbal tussle all week with President Obama over the economy.

"This jobs report is a disappointment for every family and every small business who heard President Obama declare just weeks ago that our economy is 'getting stronger by the day,'" Boehner, R-Ohio, said in a written statement.

"The writing is on the wall for President Obama's 'stimulus' policies and everyone -- taxpayers, economists, and the rest of the world -- sees it but him. How much longer are we going to continue with this disastrous spending spree that is scaring the hell out of the American people and piling debt on our kids and grandkids?" Boehner asked.

Indeed, the economic picture is not the model of recovery that the American public had hoped would occur by now.

Housing and unemployment numbers out Thursday showed that the expiration of the $8,000 homebuyer tax credit may have contributed to a 30 percent drop in contracted homes. The Commerce Department reported last week that new home sales fell 33 percent last month, also to the lowest level on record.

The stock market also is struggling to approach pre-recession highs. After touching 11,000 in April, the Dow Jones Industrial Average closed the second quarter at the lowest level for the year, and down 10 percent from just three months ago, to below 10,000.

And manufacturing orders dropped to their lowest level since October. The index fell by the largest monthly decline since December 2008.

A Congressional Budget Office report out Wednesday underscored the implications for the country's long-term health of a persistently weak economy. Fewer jobs means fewer taxpayers, which means less revenue for the government. If intensive federal spending is not yielding a return on investment, the government is that much deeper in the hole.

Under one scenario, the CBO said debt would reach 109 percent of GDP by 2025 and 185 percent by 2035.

Rep. Dave Camp, R-Mich., the ranking member on the Ways and Means Committee, said Friday's unemployment report is clear indication that there is too much taxing and deficit spending going on in Washington.

"Employers simply do not know what to expect next from Washington or how much it will cost them," he said in a written statement. "The result is an unemployment rate that is unacceptably high."

White House senior economic adviser Christina Romer tried to focus on the positive aspects in the economic report, noting the 83,000 private sector jobs added last month and the dip in the unemployment rate.

"These continued signs of healing are important, particularly given the recent volatility in world markets and the mixed behavior of other recent economic indicators," she wrote in the White House blog. "However, much stronger job gains are needed to repair the damage caused by the financial crisis and put the millions of unemployed Americans back to work."

The Associated Press contributed to this report.