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Beltway Buzz

Economic Agony

The unemployment rate fell to 7.4 percent last month. That's the lowest it's been in nearly five years.

On the surface, that's good news, but underneath the facade, America's economy remains weak.

Unemployment fell because more Americans found jobs, while others stopped looking and were no longer counted as unemployed. That's because jobs are still hard to come by.

Employers created a combined 26,000 fewer jobs in May and June than previously estimated. Americans worked fewer hours in July, and their average pay dipped.

The economy's subpar growth and lackluster consumer spending have businesses thinking thrice before hiring new workers.

Alan B. Krueger, chairman of the president's Council of Economic Advisors, put an optimistic spin on the news.

"While more work remains to be done," he wrote, the "employment report provides further confirmation that the U.S. economy is continuing to recover from the worst downturn since the Great Depression. It is critical that we remain focused on pursuing policies to speed job creation and expand the middle class, as we continue to dig our way out of the deep hole that was caused by the severe recession that began in December 2007."

Stocks immediately fell with the news that less jobs were created in July than forecast.

Brad Sorensen, market researcher with Charles Schwab said, "That tepid growth we've seen, (the economy) not being able to reach escape velocity, continues to be the story."

Meanwhile, both President Obama and House Republicans continue pushing two very different ideological visions for how to break the economic stalemate.

With a speech in Illinois two weeks ago, the president kicked off round two of a big push to get the economy on track with a program that includes more government spending.

Meanwhile, Friday, before leaving Washington for their August recess, member of the House will vote to prevent the IRS from enforcing or implementing any part of Obamacare. It marks the 40th time that the Republican controlled House has voted to repeal some of all of the law.

Republicans say implementation of the law will only further stifle job growth as businesses get bogged down in the regulations.

On Friday's economic news House Speaker John Boehner said, "Three years after the Obama administration proclaimed 'welcome to the recovery,' we're still seeing the same thing month after month: not enough new jobs and an unemployment rate far higher than promised. Nearly five years of aggressive intervention by Washington - the 'stimulus' era of excessive spending, excessive red tape, and abuse by agencies like the IRS - has left our economy treading water with slow growth, high unemployment, and stagnant wages."

An uptick in American manufacturing orders in July has some optimistic that the rest of the year could see stronger growth. We'll see what next month brings.