Maybe the economic recovery isn't on track after all.
After a week of mostly positive news, the government's monthly jobs report for November threw cold water on widening optimism that the U.S. economy is gradually climbing out of its deepest slide since World War II.
Friday's report counted just 39,000 new jobs in November, far fewer than the up to 170,000 figure forecasters had expected after a series of other economic data had pointed to growing strength in the economy. The weak showing helped push the jobless rate to a seven-month high of 9.8 percent.
Without faster growth, it will take years to create enough jobs to rehire the eight million workers who were sidelined by the recession.
"November's employment report is a painful reality check for those hoping that a meaningful acceleration in economic activity was under way," said Paul Dales, U.S. economist at Toronto-based Capital Economics. "The truth is that the economy is going nowhere at a time when companies are not willing to boost hiring."
Job growth in November was weak across the board: Goods-producing companies shed 15,000 jobs as manufacturing payrolls fell by 13,000 and construction jobs fell by 5,000. Despite recent signs of a busy holiday shopping season, retail hiring fell by a surprising 28,100.
U.S. retailers posted their best sales gains in four years last month, as they lured shoppers with deals that produced a surge of spending on Black Friday. Fo the month, sales shot up 6 percent, much better than Wall Street's estimate of 3.6 percent and the biggest increase since September 2006, according to Thomson Reuters.
Online shopping did even better, with consumers driving Cyber Monday sales up 16 percent to a record $1 billion.
On Wednesday, a private jobs count by ADP, a payroll management company, showed employers were hiring more than expected in November. The report showed surprising strength in hiring by small businesses, which expanded payrolls at the fastest pace in three years.
That report helped spark a rally in stocks pushed the Dow Jones industrial average up 356 points in two days. The jobs data threw a roadblock in front of the rally, but stocks slipped only slightly in early trading Friday as investors took stock of the range of data they've seen recently.
Investors had been encouraged by reports showing that U.S. consumers were growing more confident about the economy and getting back in a spending mood. Consumer confidence rose in November to its highest level in five months, according to The Conference Board, a business research group. The index rose to 54.1 in November, the strongest since June, from 49.9 in October.
"Consumers are feeling better about the current environment," said economist Tom Porcelli of RBC Capital Markets, which conducted a separate survey that found confidence improving in November. "When they're feeling better about the current environment, that's usually a good sign from a spending perspective."
But with households paying down credit cards and bankers less willing to lend, any expansion in consumer spending will be limited by the lack of improvement on the jobs front. Friday's jobs report showed little improvement in wages or the average number of hours worked.
The length of the average workweek in November was steady at 34.3 hours and average hourly earnings edged up just 1 cent.
"That's disconcerting," said Mark Zandi, chief economist at Moody's Analytics. "We need that income growth" to support a sustained recovery. "This number is not consistent with that."
Consumer spending also could take a hit if Congress fails to restore extended unemployment benefits for an estimated two million people that ran out Tuesday. The program, which has been renewed four times in the past two years, has become mired in the politics of a lame duck Congress.
The number of people on emergency unemployment benefits rose by 142,874 to 3.94 million in the week ended Nov. 13, the latest week for which data is available. That means a total of 8.91 million people were collecting benefits during that period.
Friday's jobs report highlighted the growing need for the extended benefits.
"The uptick in not only the sheer volume, but percentage of people, on long-term unemployment underscores the issue," said Diane Swonk, chief economist at Mesirow Financial. "This is humanitarian aid at this point."
Because households tend to spend unemployment insurance payments right away, the abrupt, unexpected loss of benefits for two million people puts a damper on consumer spending, further jeopardizing the already fragile recovery.
The recovery faces other headwinds, including a housing market saddled with millions of bank-owned houses and a pipeline of millions more homeowners facing foreclosure. Home prices are still falling, according to a report out this week, meaning that more borrowers are slipping underwater and owe more than their home is worth.
The U.S. economy also faces possible fallout from the growing economic storm in Europe, where the Eurozone's weakest economies are struggling under heavy debt loads and large budget deficits. Uncertainty about the strength of the European banking system has also rattled bond investors and renewed political infighting over a coordinated bailout.
Friday's weak employment report will raise pressure on the Federal Reserve to continue rolling out a controversial $600 billion program to buy long-term government debt. The massive buyback, known as "quantatative easing," was launched last month to try push record low interest rates even lower and help revive the economy.
Though weak demand for borrowing helps ease upward pressure on interest rates, rising concerns about the U.S. budget deficit could force the Treasury to pay higher rates on new bonds to attract investors. But so far demand for U.S. debt remains strong, according to former Fed governor Randall Kroszner.
"We have incredible fiscal challenges in the U.S.," he said. "But people are running to the U.S and U.S. Treasuries because things are worse in Europe and in many other places."