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The U.S. economy adds only 54,000 jobs in May

A job seeker looks through job listings at the East Bay Works One-Stop Career Center on Jan. 9, 2009, in Oakland, Calif. The unemployment rate in the U.S. surged to 7.2% in December, reaching its highest level in 16 years.

JEREMY HOBSON: Now let's get to jobs. The government delivered the news this morning that the U.S. economy added 54,000 jobs last month. That's the smallest increase in eight months. The unemployment rate ticked up to 9.1 percent as state and local governments cut jobs.

Let's get reaction now from Chris Low, chief economist with FTN Financial. He's with us live from New York as he is every Friday. Good morning.

CHRIS LOW: Good morning.

HOBSON: Well Chris, first of all, what is the reason that you see behind this bad number we got today?

LOW: Well, look, it's a pretty broad based job loss, right? There were losses in manufacturing and information technology, even temp hiring was down. Leisure hiring was down. And to me, it follows from three months of weakening consumer spending, which all traces back to higher gas prices.

HOBSON: Higher gas prices, and is there any change that those gas prices are going to start to come down in a significant way that will change the dynamic for jobs?

LOW: I think they probably will at some point, but one of the really troubling aspects of trading this week is that the stock market of course is down a lot. The bond market is up a lot. Both of those -- normal reactions to suddenly realizing the economy's not as healthy as we thought it was. But oil prices -- only down $1.50 today. And that is a disappointingly small reaction. I'd like to see a bigger move there. If we did get oil prices down substantially, I think it would take care of most of the slow down. We'd see a reacceleration in the economy.

HOBSON: Chris, what about the long-term unemployed? I noticed the number of people who've been out of work for six months or more increased last month to 6.2 million. Is there any hope for these people?

LOW: There is, but what it requires is economic activity. A solid 4 to 5 percent growth that's sustained for more than a couple of quarters. We've had one or two quarters of that kind of growth in the last two years, but only sporadically. And every time we've had a strong quarter, it's been followed by a weak one. You know, hopefully within a year or two we can get there, we're just not there yet.

HOBSON: Chris, quickly, any chance that you can give me something nice to end this interview on? So it's not so bad?

LOW: Absolutely. You know the worst job numbers in eight months, but they came after the best job numbers in six years. Look at the two months -- April and May together. Traders are paid to overact. The rest of us don't have to.

HOBSON: Chris Low, chief economist with FTN Financial, thanks so much.

LOW: You're welcome.

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