Economy added 169k jobs in August as the recovery grinds along - Washington Post

The government also lowered its estimate of the number of jobs created in June and July by 74,000.

"I don't like this jobs report," said Jared Bernstein, senior fellow at the Center for Budget and Policy Priorities. "I have a hard time seeing a labor market improving at the pace we need."

The lackluster report will likely be a critical consideration as officials at the Federal Reserve meet later this month to decide whether to begin scaling back the amount of stimulus they've been pumping into the economy. The central bank has been buying $85 billion in Treasurys and mortgage-backed securities each month to help push down long-term interest rates and spur demand among consumers and businesses. The Fed has said it will not pull back until the recovery strengthens, including the job market.

But there is much debate within the central bank over when that will happen. Fed Chairman Ben S. Bernanke has said officials will begin reducing bond purchases this year — and many analysts believed they could start as soon as this month. Speaking Friday in South Carolina before the jobs report was released, Chicago Fed President Charles Evans said the central bank's decision will depend on the incoming economic data, which he acknowledged have been murky.

"For me, to start the wind-down, it will be best to have confidence that the incoming data show that economic growth gained traction during the third quarter of this year and that the transitory factors that we think have held down inflation really do turn out to be transitory," he said.

Richard Moody, chief economist for Regions Financial Corp, said he believes the Fed will begin paring back its bond purchases in September but suggested the reduction could be small. That would allow the Fed to test the waters under a cloudy economic picture.

"To anyone looking for clarity amidst 38 pages of data, forget it," Moody said.

Meanwhile, Washington remains a wild card for the economy. Congress must agree on at least a short-term spending plan by October or risk shutting down the federal government. In addition, the nation may not be able to pay all of its bills unless lawmakers agree to raise the debt ceiling before a mid-October deadline. House Speaker John A. Boehner (R-Ohio) has promised a "whale of a fight" and is likely to seek changes to President Obama's signature health-care law in exchange for cooperation on the debt limit.

"It's hard to judge it in a normal way because the threat is irrational," said Robert Shapiro, a former senior Democratic economic adviser who heads the advisory firm Sonecon. "It doesn't really advance the self-interest of anyone."

Overshadowing those debates is the possibility of a U.S. attack on Syria and tumult in the Middle East. Crude oil prices jumped to an 18-month high in late August, though they have moderated since. The price of West Texas Intermediate crude oil for customers needing delivery in October rose about 1 percent Thursday, to $108.35 a barrel.

At the very least, the discussion of U.S. involvement in Syria may delay the fight over — and eventual resolution of — the country's fiscal problems.

"The ongoing debate regarding Syria on Capitol Hill increases the likelihood that lawmakers punt on both the budget and the debt ceiling, which would set up another fiscal fight at the end of 2013," said Isaac Boltansky, policy analyst at Compass Point.

Although many analysts say the likelihood of an actual government shutdown or debt limit breach is low, a messy public fight could be enough to spook investors and businesses.

U.S. stock markets were modestly higher in late Friday morning trading. The major indexes had tumbled earlier in the morning as President Obama spoke about Syria during news conference in Russia, where he has been meeting with world leaders for the Group of 20 summit.

In his remarks, Obama called the United States "a source of strength in the global economy" and touted gains in manufacturing and new regulations aimed at fortifying the nation's banks.

"We've put more people back to work, but we've also cleared away the rubble of crisis and laid the foundation for stronger and more durable economic growth," he said.