A hot summer that's gripped much of the U.S. has been accompanied by a stone-cold job market. That trend held fast last month as the economy added just 71,000 private sector jobs, after excluding the loss of temporary U.S. Census and other government jobs, the U.S. Labor Department announced Friday. Overall, the economy shed 131,000 jobs in July.

July's modest 71,000 gain in private payrolls was less than the 100,000 economists had forecast. The number of temporary U.S. Census workers fell by 143,000, and government jobs overall declined by 202,000.

Equally significant, June's total was revised to a loss of 221,000 jobs, worse Employmentthan the previously estimated 125,000 cuts, including a gain of just 31,000 private sector jobs, down from the initial estimate of 83,000.

A Bloomberg survey had expected the economy to lose 70,000 jobs in July, but to add 100,000 private sector jobs. July's job loss total was the second straight monthly drop in jobs this year.

The Official Jobless Rate Remains 9.5%

July's poor private sector job gain may prompt the U.S. Federal Reserve to implement additional measures to stimulate a U.S. economy that's operating well below potential and that hasn't created nearly enough full-time jobs for the estimated 22 million to 23 million Americans seeking full-time work.

The unemployment rate in July remained at 9.5%. But that modest good news stems in part from fewer people looking for work, meaning they're not officially counted as unemployed even though they're without work. That rate, called the workforce participation rate, dipped to 64.6% in July from 64.7% in June.

Underemployment has also been a persistent problem in this recovery, and it didn't improve last month. This alternative measure of unemployment, which includes both part-time workers who want full-time work and discouraged workers, held steady at 16.5%.

Manufacturing Keeps Adding Jobs

July's report did contain a few bright spots. The average workweek increased by 0.1 hour to 34.2 hours. Average hourly earnings increased 4 cents to $22.59 per hour.

Also, the manufacturing sector -- which has led the U.S. economic recovery to date -- added 36,000 jobs and has now created about 172,000 jobs since December 2009. Health care rose by 27,000 jobs and has now added 231,000 jobs in the past 12 months. Transportation/warehousing added 12,000 jobs, and mining rose by 7,000.

However, retail added just 6,700 jobs. And temporary positions -- a rise in which historically has preceded increases in permanent positions -- dropped by 6,000 in July. Also, the financial services sector lost 17,000 jobs, professional/business services lost 13,000 jobs, and construction lost 11,000 jobs.

Despite a few positive sectors, the overall state of the U.S. labor market has to be characterized as still weak. About a year into the recovery, the U.S. economy still isn't creating the roughly 150,000 to 200,000 private sector jobs per month needed to reduce unemployment and help the recovery ascend to a self-sustaining status.

U.S. Productivity Cuts Both Ways

One of the ironies of the U.S. economy, and a factor that's complicating the employment situation, is that one of the nation's strengths -- productivity -- is a two-edged sword.

Aided by technology and perpetual expense discipline, among other factors, U.S. productivity continues to increase at an impressive rate --at a 3% pace in the last 12 months and at a 4% rate in the first quarter of 2010.

The upside is that corporate earnings have been boosted, and that's enabled many U.S. companies to amass healthy amounts of cash -- factors that are bullish for stock prices and give many corporations an advantage over foreign competitors.

But during the early post-financial-crisis era, the downside of that increased productivity is becoming more clear to economists and job-seekers alike: High productivity and more-efficient business models mean many businesses don't have to hire as soon or in the volume they did during past recoveries.

The result is fewer new jobs than the nation would typically see early in an expansion. At minimum, it's certainly delayed hiring by super-efficient firms. And so far during this recovery, it has kept the U.S. unemployment rate from finding the down-slope.

Innovation Could Save the Day -- Again

Of course, the compelling question for investors and job-hunters alike is: What will it take to get the great American job-creation machine rolling again?

DailyFinance's Peter Cohan makes a strong case that the key is technology-led growth, or innovation, and if history offers any precedent, these forces will likely play a pivotal role again.

That's not to sugarcoat the task ahead for the nation. Seven million Americans were looking for work before the start of the 2007-2009 recession that eliminated roughly 8 million more full-time jobs. Add those millions of underemployed people, and the result is an enormous job hole.

But investors and job-seekers should also note this: After each period of job loss, the U.S. economic system has shown a remarkable ability to adapt, reorganize and find new engines of growth. After each economic upheaval the country has endured, the U.S economy adapted and retooled. Americans retrained, and new sectors were discovered. Chances are they will again.

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Cynthia Bilder

contemplate greed verses consumption. there is not enough money being circulated
around to support the masses. Consider the illiterate rate in America, then look at the type of disgussions politicians offer. It does not add up anymore. America is not alone in its struggle to help it's people, the problem is, the powerful have the upper hand and no matter who is running this country, not much can be balanced to offer each one of us what we need to support an existance of personal satisfaction. The opportunities of the past no longer exist. we are paying the price of the global failure for individual security.

August 10 2010 at 4:56 AM Report abuse rate up rate down Reply

No, Bama did not start the recession, he just made it worse.
Every day he brags about more new jobs saved or created, Fact, we loose jobs over all more than we gain or keep. Believe it or not, the recession we are in today was started over 30 years ago, YES I said "OVER" 30 years ago. Govt policies that were started and stopped and restarted in the mid 90's finally caught up to us. Over the years the Republicans and Democrats have been out to destroy this country. That is one thing they have been doing very well. Neither the Republicans nor the Democrats have been keeping up the vow's or the traditions of what this country stands for. The Democrats and their supporters have been forcing a "Social equality" form of transition to this country, While the Republicans have been Exploiting the capitalist dream into a Corporate slave state. Go back 100 years and look at Amercia, the manufacturing that dominated the world is a shell of what it used to be. The only difference between the Dems and the Reps is the Democrats will follow the party to the destruction of this country with joy, and Republicans will follow with saddness. And Arni in Cali is no more a Republican than W was a true Conservative.

August 10 2010 at 3:32 AM Report abuse +1 rate up rate down Reply

President Obama continues to say he and the democratic congress are creating changes that will make it impossible for the economy to go bad again. He talks about the flaws in the economic system.
I wonder which system he is talking about. Is it the same system that made us an economic powerhouse? Or is he talking about the wonderful European system with it's huge beuracracies, slow growth and now one bankrupt country after another?

August 09 2010 at 5:18 PM Report abuse +2 rate up rate down Reply

What is going on? I thought "Happy Days are Here Again".

August 09 2010 at 3:35 PM Report abuse +4 rate up rate down Reply

No recovery until 2012 and, then, only if we get rid of Obama and his moron congressional friends.

August 09 2010 at 2:34 PM Report abuse +7 rate up rate down Reply

The State and Federal Governments are playing with the unemployment numbers, since when are construction workers considered season workers, maybe the road construction.

Maybe the the automakers should be seasion as well seeing they shut down 2-4 weeks to re-tool the plants.

August 09 2010 at 7:18 AM Report abuse +4 rate up rate down Reply

Obama is worthless, hes a puppet who hasnt got a clue ,a straw man without a brain, too many dumb people jumped on his BANDWAGON TO ELECT HIM AND DIDNT VOTE FOR THE REAL CHANGE MAN RON PAUL

August 09 2010 at 3:50 AM Report abuse +6 rate up rate down Reply

In November, the people will send a real message to the hate filled liberals bye bye

August 08 2010 at 8:57 PM Report abuse +8 rate up rate down Reply

Obama is a total failure with the economy

August 08 2010 at 8:55 PM Report abuse +6 rate up rate down Reply
1 reply to mrtaxattorney's comment

I see that AOL has allowed the idiots that have no brains back on these message boards. They have nothing to say, nothing to offer, but ridiculous comments like "Obaman is a total failure. . . ."

August 09 2010 at 11:17 PM Report abuse +1 rate up rate down Reply

CONSUMER SPENDING FOR RICH & POOR The average U.S. household spent $46,409 on goods and services in 2005. The richest 20% of households spends nearly five times as much as the poorest 20%. How spending stacks up by quintile of income: http://adage.com/images/random/consumerchart011607.pdf

See full article from DailyFinance: http://srph.it/a2lP4J

August 08 2010 at 3:06 PM Report abuse -4 rate up rate down Reply