U.S. Creates Only 88,000 New Jobs in March

Analysts are starting to worry the U.S. economy is cooling again, after only 88,000 new jobs were created in March.

The job count is notably lower than generally predicted, fueling speculation by observers the country is entering another financial lull, even before expected federal spending cuts kick in.

According to data from the U.S. Labor Department, the unemployment rate dropped to 7.6 percent --- but that was because the workforce reached its lowest level since 1979.

On the other hand, the department revised its job counts up for January, which saw a jump from 119,000 to 148,000, and February, boosted from 236,000 jobs to 268,000.

But, the dip in March "reinforces our view that the estimated 3.5 percent real growth in the first quarter is not likely to be sustained," said Kathy Bosjancic, director of macroeconomic analysis at the Conference Board. "Instead, we see the overall economy, led by the consumer, downshifting significantly in the second quarter, struggling to get close to 1 per cent real growth."

US stocks retreated early Friday as investors turned to the U.S. Treasury market. Demand for the U.S. dollar also rose, the greenback erasing earlier losses against the yen.

"The shockingly disappointing non-farm payrolls growth has sent the dollar reeling," Marc Chandler, global head of currency strategy at Brown Brothers Harriman, told the Financial Times. "This is the poorest US jobs growth in nine months and threatens to repeat the pattern of the last couple of years in which a spurt in job creation is short-lived."

Government employment dropped by 7,000, as the private sector lost 3,000 jobs in manufacturing and 24,000 in retail --- the latter statistic suggesting the 2 percent increase in payroll taxes agreed to at the start of the year, and which affects all American workers - has started to impact consumer spending.

"This is far from a wake-up call. It is an urgent plea for help by Americans and the businesses that employ them for policy makers to stop pointing fingers and to start implementing policies that encourage job growth and capital investment," asserted Matthew Shay, president of the National Retail Federation.

Alan Krueger, chairman of the White House council of economic advisers, said the new data showed the need for "more work to be done" and pointed out that the March report was the first since automatic budget cuts took effect.

Republicans have pounced on the poor job numbers as another indicator of President Obama's failing economic strategies.

"The president's policies continue to make it harder for Americans to find work," announced House Speaker John Boehner.

President Barack Obama is expected submit his own budget proposal next week for the 2014 fiscal year, which begins in October.