Bush: Weak Jobs Numbers Consistent With Slow Economy 

WASHINGTON (Reuters) - President George W. Bush on Friday said the weak data in the government's employment report for May was consistent with an economy facing a slow growth period.

"It's clearly a sign that there is consistently slow economic growth," Bush said.

His comments came after the Labor Department reported that the national unemployment rate hit 5.5 percent, the highest rate in more than 3- 1/2 years and the biggest monthly increase in 22 years.

The same report showed May was the fifth straight month that U.S. employers cut their payrolls.

(Reporting By Joanne Morrison; Editing by Chizu Nomiyama)

Jobless Rate Leaps to 3 - 1 / 2 Year High In May 

WASHINGTON (Reuters) - The U.S. unemployment rate surged to 5.5 percent in May, its highest in more than 3-1/2 years, as the barely growing economy lost jobs for the fifth straight month.

The jump in the monthly jobless rate was the biggest in 22 years and fired concerns the economy was at increased risk of stalling into recession.22

Economist Robert MacIntosh of Eaton Vance Management in Boston described it as a "shocker" but not enough to conclude growth was completely stalling.

"The actual payrolls number itself was consistent with what we have been seeing in terms of a slowdown but not quite a recession. But the employment rate gives you a much weaker economic outlook than the payrolls number," said MacIntosh.

The Labor Department on Friday said 49,000 jobs were shed by empl2oyers last month, on top of 28,000 in April -- for a total of 324,000 lost since the beginning of the year. May's unemployment rate was up from 5 percent in April and was the highest since October 2004.

At a swearing-in event for a new Housing and Urban Development secretary, President George W. Bush briefly referred to the disappointing jobs report but conceded only that it signaled slower growth.

"It's clearly a sign that there is consistently slow economic growth," Bush said.

Stock prices were battered on Friday by the soft jobs data and by fear that surging oil prices could push the country back into 1970s-style stagflation, in which growth slows at the same time that prices keep climbing.

Oil futures prices rose more than $10 and a Morgan Stanley report said U.S crude prices could top $150 by the July 4 national holiday -- a development that would hit consumers hard at the gasoline pump.

The Dow Jones industrial average <.DJI> was off more than 300 points in mid-afternoon trade and the Nasdaq Composite Index <.IXIC> was also sharply lower.

But U.S. Treasury debt prices shot up as investors bet the weak jobs report pushed back any chance that the Federal Reserve might raise interest rates before November's presidential election.

WHITE HOUSE UNEASE

It added to discomfort at the White House, where spokesman Scott Stanzel said the unemployment rate was "too high for our liking," though he noted it stemmed partly from more job-seekers and "not from a broad increase in lay-offs."

The number of people in the work force climbed by 577,000 in May, up sharply from an increase of 173,000 in April. There typically is a rise in the number of young people seeking temporary work when school is out, the department said.

Tig Gilliam, head of staffing company Adecco SA's U.S. operations, said more people appeared to be seeking work as high food and gasoline prices crimped their budgets.

"We do see more and more candidates because of gas prices and their inability to easily relocate; they're looking for work, but frankly they need something close to home," he said.

The surge of job seekers may have introduced "serious distortion" into the monthly data, said Alan Ruskin, chief international strategist at RBS Global Banking in Greenwich, Connecticut.

"The odds ... favor a dip in the unemployment rate to 5.3 or 5.4 (percent) next month, which would look to be more in keeping with trend rather than the unusually low rate prior to this month, or the spike that has followed," he added.

Wall Street economists surveyed by Reuters forecast that 58,000 jobs would be lost in May, but had foreseen the unemployment rate rising only to 5.1 percent.

The unemployment rate and the number of jobs added or lost each month are based on separate surveys, so it is possible for the rate to rise or fall disproportionately with respect to the change in the number of workers on payrolls.

PACE OF LOSSES SLOWER

Paul Ashworth, senior US. economist with London-based Capital Economics, noted that the pace at which jobs were being lost has actually slowed. In the first three months this year, job losses averaged about 83,000 monthly, but in April and May, the pace slowed to 38,500.

"Let's be clear: the economy is still very weak," Ashworth said. "The economy has little forward momentum, employment is shrinking and the unemployment rate could reach 6 percent by the end of the year."

There were substantial job losses last month in construction industries, where 34,000 cuts were made, in manufacturing, where 26,000 jobs were lost, and among providers of professional services, where 39,000 jobs were lost.

One of the few bright spots was in education and health services, with 54,000 more jobs added in May, on top of 61,000 in April.

(Additional reporting by Nick Zieminski and Chris Reese in New York, Editing by Dan Grebler)

Ed McMahon talks about possible home foreclosure 

LOS ANGELES (AP) -- Ed McMahon blames the possible foreclosure of his multimillion-dollar Beverly Hills house on a set of problems all too familiar to many Americans: a foundering economy, health problems and poor planning.

''If you spend more money than you make, you know what happens,'' McMahon said Thursday night on CNN's ''Larry King Live.'' ''You know, a couple of divorces thrown in, a few things like that. And, you know, things happen.''

McMahon, 85, appeared with his wife, Pamela. The couple said they are $644,000 behind on their mortgage payments and are in negotiations with lender Countrywide Home Loans Inc. to set a foreclosure date.

McMahon, in a neck brace, said he had stopped working since he broke his neck in a fall 18 months ago. He didn't elaborate.

McMahon, who was Johnny Carson's sidekick on the ''Tonight'' show, said the house had been on the market for two years and that although 50 organizations or individuals had looked at it, no one had made an offer. Documents show McMahon has a $4.8 million mortgage on the home.

''It's like a perfect storm,'' he said. ''Economy problems. Selling the house right now is a tremendous operation.''

McMahon bought the six-bedroom, five-bathroom, 7,000-square-foot house in January 1990. The mansion, which is listed at $6.25 million, is in a gated hilltop section off Mulholland Drive called The Summit. Britney Spears is among his neighbors.

Asked why a millionaire couldn't make house payments, Pamela McMahon said the couple had less money than people may think and suggested they could have done a better job managing their finances.

''We didn't keep our eye on the ball. We made mistakes,'' she said. ''It's embarrassing to say the least, and it's sad, because you know, Ed's worked his whole entire life.''

McMahon, a former pitchman for the American Family Publishers' sweepstakes and former ''Star Search'' host, received a $7.2 million settlement after a toxic mold spread through his house and led to the death of their dog in 2001.

With legal fees and construction costs of fixing the mold problem, the money did not go far, McMahon said.

''We had nine lawyers, they had nine lawyers,'' McMahon said. ''By the time that's all over, and you rebuild the house from the outside in. ... A lot of things went wrong.''

Still, McMahon said he was hopeful. He said there has been renewed interest in the house this week.