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Hiring slowed in April and workers dropped out of the labor force in droves — not a good sign for the job market going forward.

The economy added just 115,000 jobs in the month, the Labor Department reported Friday, down from March when employers created 154,000 jobs.

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Obama battles job crisis

The U.S. lost 4.3 million jobs in President Obama’s first 13 months in office. Track his progress since then.

Meanwhile, the unemployment rate fell to 8.1% as 342,000 workers dropped out of the labor force. At 63.6%, the portion of the working-age population participating in the job market is now at its lowest level since 1981.

That’s problematic mainly because it weighs on economic growth.

"If there are less people working, then your potential for what the economy can produce is reduced," said John Silvia, chief economist at Wells Fargo.

Job market dropouts

The labor market has been on a roller coaster this year, with job growth starting off strong in the first couple of months of 2012. Then a disappointing slowdown in March led many to wonder whether the recovery was taking a turn for the worse. April’s weak growth compounded those fears.

But revisions from previous months also showed the economy gained 53,000 more jobs in February and March than originally thought.

Some economists believe the slowdown now is mainly due to the seasonal adjustments the government uses in calculating its figures. Warm weather earlier in the year may have given the job market an artificial boost in January and February, which is now tapering off.

"This is payback in terms of the weather," Silvia said.

Retailers added 29,000 jobs in April, while restaurants and bars added 20,000 workers. Temporary agencies hired 21,000 and manufacturers added 16,000 jobs. Meanwhile, the government continued to slash workers.

Recruiters say they’re still seeing plenty of demand for high-skill workers in technology, health care and professional services like accounting, but not enough of America’s unemployed have the right qualifications.

"Companies are changing and innovating, and therefore the jobs that they need are changing," said Kathy Kane, senior vice president of talent management at Adecco Group North America. "The hardest part for us right now is to keep up with those changes and find the workers with the skills for the new jobs, not the old jobs."

Indeed, workers with a bachelors degree or higher have only a 4% unemployment rate, while those with just a high school education have a 7.9% jobless rate.

Overall, the job market has a long way to go to climb out of the deep hole left by the financial crisis. Of the 8.8 million jobs lost, only about 3.7 million have been added back.

Roughly 12.5 million Americans remain unemployed, and 41.3% of them have been so for six months or more. 

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Federal Reserve policymakers are worried that recent strong gains in hiring could fizzle if U.S. economic growth doesn’t pick up.

Minutes of the Fed’s March 13 meeting show that members expressed those concerns before sticking with a plan to keep interest rates at record lows until at least late 2014.

A couple of members said they want to take further steps to boost the economy if conditions worsen or inflation remains tame, according to the minutes, which were released Tuesday.

Stocks fell further after the minutes were released. The Dow Jones industrial average dropped 105 points to 13,159.

The Fed sketched a slightly sunnier view of the economy after its last meeting, largely because of the best three months of hiring in two years. But members noted that there have been similar bursts of hiring in the past two years that ended up fading.

The readout from the Fed’s last meeting largely echoed a speech Fed Chairman Ben Bernanke delivered last week to a gathering of economists.

The Fed is concerned that the recovery could falter, as it did last year. Americans aren’t receiving meaningful pay increases. Gas prices are high. And Europe’s debt crisis could weigh on the U.S. economy.

As long as inflation remains tame, analysts think the Fed will likely hold interest rates down to give the economy more support. Most economists don’t think Fed officials will change their interest-rate policy at their next meeting on April 24-25 and will ease credit only if the economy slows further.

Still, the outlook for the economy is improving.

Employers added an average of 245,000 jobs a month from December through February pay day loans. The unemployment rate has fallen nearly a full percentage point since summer, to 8.3 percent.

The government will report Friday on the job market in March. Many economists believe that report will show another strong month of job creation with a net gain of 210,000 jobs. They expect the unemployment rate will hold steady at 8.3 percent.

U.S. consumers boosted their spending in February by the most in seven months, raising expectations for stronger growth at the start of the year.

Americans spent more even as their income barely grew. To make up the difference, many saved less.

Many people are more confident in the economy, despite stagnant wages and higher gas prices. The University of Michigan Consumer Sentiment Survey index rose last month to its highest level since February 2011.

The economy grew at an annual pace of 3 percent in the October-December quarter. Most economists expect slightly slower growth in the current January-March quarter.

Bernanke said the combination of modest economic growth and rapid declines in unemployment is something of a puzzle. Normally, it takes growth of roughly 4 percent annual growth to lower the rate by 1 percentage point over a year.

Bernanke cautioned that he doesn’t expect the unemployment rate to keep falling at its current pace without much stronger growth and more robust hiring.

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A downtown building left vacant by businessmen brothers Mike and Steve Roberts is getting new life from a developer who is refurbishing the building as apartments.

Developer Brian Hayden said Tuesday he plans to open the $6.5 million project, at 400 Washington Avenue, on April 13 to coincide with the Cardinals’ home opener.

But Hayden said a more basic reason for undertaking the project is to profit from St. Louis University’s decision to relocate its law school to downtown from the main campus in midtown. Hayden, who has a SLU degree in aerospace administration, already has two apartment projects near the university’s main or medical school campuses.

About five years ago, the Roberts brothers had a plan to develop 400 Washington as a hotel. Their Roberts Downtown Development Co. bought the former WS Hotel with an eye toward redoing it as extended-stay lodging. They later abandoned that plan and put the building up for sale last year.

Hayden said he is refurbishing the former WS Hotel rooms as 78 studio, one- and two-bedroom apartments. The WS Hotel suites, developed for extended stays, have full kitchens, Hayden noted. He said work on his project, called Gallery 400, began as soon as he completed the building’s purchase on Feb. 7.

The structure, across Washington Avenue from the Missouri Athletic Club, was built as the headquarters of Edison Brothers Stores.

Hayden is an anomaly among St. Louis developers because he uses no tax incentives or tax credits in his projects. Like his Gallery 3450 project on Russell Boulevard and his Gallery on Washington, near SLU, the new downtown project is financed without public incentives, he said.

“If the project can’t support itself financially, then it shouldn’t be done,” Hayden said. “Every project should stand on its own merit.”

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Dutch Freedom Party leader Geert Wilders said the Netherlands, the euro area

The federal deficit was lower through the first four months of the budget year than the same period last year. Still, the deficit is expected to top $1 trillion for the fourth year in a row, putting more pressure on Congress and President Barack Obama in an election year.

The deficit totaled $349 billion through January, the Treasury Department said Friday. That’s $70 billion less than at the same point last year. January’s monthly deficit was $27 billion, roughly half of the deficit in January 2011.

The White House later confirmed a report that President Obama’s new budget predicts a $1.3 trillion deficit for the full fiscal year, which began on Oct. 1. The figures were first reported in The Wall St. Journal, which viewed leaked draft budget documents.

If the administration is correct, the 2012 deficit would be the same as last year’s imbalance. The government ran an all-time record deficit of $1.41 trillion in fiscal 2009, and a $1.29 trillion imbalance in 2010.

This year’s deficit is running lower in part because of higher corporate tax receipts, the department said. That has boosted government revenue to $790 billion from October through January.

Spending fell to $1.14 trillion in the same period, though excluding the accounting changes it was largely flat.

Still, the picture hasn’t improved as much as the Congressional Budget Office had estimated it would last year bad credit pay day loans. In August, the agency projected that the deficit would come in at $973 billion this year. But last week, it boosted its estimate, citing lower than expected tax revenues.

Congress has shown little ability recently to make difficult changes to tax levels or spending programs to reduce the deficit. They will face another big challenge at the end of this year, when tax cuts that were first enacted in 2001 and 2003 are set to expire. And a set of automatic spending cuts totaling about $1.2 trillion over 10 years is also scheduled to kick in.

Those changes, along with several other provisions that will automatically take effect under current law, would substantially reduce the deficit in future years.

But the CBO estimates that if Congress extends the tax cuts, as many observers expect, and if they block the spending cuts, the deficit will remain near $900 billion or higher for the next 10 years.

President Obama is set to release his annual budget proposal Monday. It will include a set of economic projections, including that unemployment will average 8.9 percent this year. White House officials dismissed the figure Thursday as outdated. The rate fell to 8.3 percent in January.

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Greece is missing its debt-cutting targets, German Finance Minister Wolfgang Schaeuble told lawmakers today, intensifying pressure on Greek politicians to deliver on austerity promises.

Schaeuble said in Berlin that Greece

China (CNGDPYOY) signaled caution toward more monetary loosening by holding off on a reduction in bank reserve requirements that some economists had predicted would come before a week-long holiday ending Jan. 28.

Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that ratios were likely to fall ahead of the Lunar New Year festival, which boosts demand for cash. The central bank instead used reverse-repurchase contracts to add money to the financial system.

Premier Wen Jiabao seeks to steer the world

Spain

Stocks are opening sharply higher after a strong start to the U.S. holiday shopping season and signs that Europe is getting its debt crisis under control.

Initial reports show a record number of shoppers hit the mall or bought gifts online over the holiday weekend.

Investors are also hoping that recent deterioration in Europe’s debt crisis will get the region’s leaders to agree on a package of measures that can ease market concerns over whether the euro currency itself can survive.

The Dow Jones industrial average is up 274 points, or 2.4 percent, at 11,506 shortly after the opening bell Monday.

The Standard & Poor’s 500 index is up 29, or 2.6 percent, at 1,188. The Nasdaq composite is up 70, or 2.9 percent, at 2,512.

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