The Labor Department reported that job growth ground nearly to a halt in July.
The new report creates a political problem for President Bush, who had pointed to the strong job gains earlier this year as a result of the tax cuts he had championed (which helped only his very rich friends). The weak job growth of the last two months means that he is now highly likely to stand for re-election with an employment level lower than when he took office. That would be the first time that has happened in 72 years, when Herbert Hoover lost to Franklin D. Roosevelt in 1932 amid Depression-era job losses.
"It's premature for George Bush to raise the banner of `Mission Accomplished' above the economy," said Representative Rahm Emanuel, Democrat of Illinois. "If you're in the middle class, the economy has not turned the corner."
Last month's hiring slowdown occurred across most industries. Retail employment fell for the first time since December, according to the Labor Department, which adjusts its statistics to smooth over normal seasonal changes. Banks, hotels, movie studios and phone companies all reduced their workforces too. Government employment remained flat, as it essentially has for the last few months.
For the first time this year, more industries cut jobs than added them, the government reported.