Weak U.S. jobs report slams Wall Street

A bombshell jobs report sent Wall Street into a frenzy this morning as U.S. employers added only 88,000 positions last month, yet one expert said this wasn't surprising given increases in payroll taxes and the effect of automatic federal budget cuts.

"I don't think we have to be overly worried, but we have to trim our expectations a bit. The growth is going to be slower than the last couple of reports imply but that's because the sequester is beginning to kick in and households are reacting to the cut in take-home pay. That's a pretty big thing," said Northeastern University economist Alan Clayton-Matthews. "If it weren't for those, growth would be really strong. So what we're seeing is just the simple math of positive growth on one side and negative effects on growth on the other and here's the net – slow to moderate growth."

Even though the unemployment rate fell a tenth of a percentage point to 7.6 percent last month, its lowest level in four years, the figure reflects the fact that more people have stopped looking for jobs. Meanwhile, the percentage of Americans working or hunting for jobs fell to 63.3 percent in March, the lowest such figure in more than three decades.

Stock futures took a dive upon the release of the report and markets are down this morning.

Yet one positive was the fact the economy added another 61,000 jobs in January and February combined compared to prior estimates.

While effects from the federal budget cuts, or sequester, will build over the coming months, Clayton-Matthews said an improved housing market, higher housing and stock prices, and increased demand for automobiles have helped to balance out economic woes.

"There's sufficient private demand out there and the economy has been adding jobs for months so that has been increasing household incomes, so that more than offsets drag from tax increases and budget cuts," he said.

Yet David Tuerck, executive director of the Beacon Hill Institute, said today the number of jobs that have disappeared from the U.S. economy since President Obama's first inauguration in 2009 has now ballooned to 5.1 million.

"The labor force participation rate is now the lowest that it has been for the month of March over the last 34 years," said Tuerck. "It appears that the major effect on labor market conditions of the administration's economic policy has been to discourage workers from seeking jobs."

The Associated Press contributed

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