WASHINGTON - The U.S. economy added only 96,000 new jobs in August, according the Department of Labor, the latest sign of a timid recovery from deep recession of 2007 to 2009.

The timing of the report, one day after Democratic National Convention wrapped up, could disrupt the momentum President Obama garnered from the four-day political pep rally in Charlotte.

The unemployment rate fell to 8.1 percent from 8.3 percent in July, but that was due in large part to the fact that many people dropped out of the hunt for a job during August.

Employers have added an average of 139,000 new jobs each month since the beginning of 2012, a slower pace than the previous year when hiring averaged 153,000 per month.

When President Obama took office in January of 2009, the economy was losing 700,000 jobs per month on a downward slide that began in 2007 with the housing crisis and the near collapse of the financial sector.

Read: Full Bureau of Labor Statistics August 2012 report here.

Campaign talk

On the campaign trail Friday, President Obama acknowledged the pace of the recovery needs to improve.  He pointed out, however, that it marks the 30th consecutive month of net job gains after the economy bottomed out in the fall of 2009.

"We could create a million new jobs right now if Congress would pass the jobs plan I sent to them a year ago," Obama told a crowd in New Hampshire.

His plan would make targeted investments in public schools, higher education and infrastructure such as roads, bridges and ports.  Thus far the Republican-controlled U.S. House has not agreed to such spending.

GOP nominee Mitt Romney, on a campaign swing to Iowa, called the new jobs numbers more evidence of the need for change in the White House.

"Seeing that kind of report is obviously disheartening to the American people who need work, and are having a hard time finding work," Romney told reporters.

"Real income, real wages are also not rising. And many people are leaving the job market altogether."

Romney has pledged to add 12 million jobs to the economy, if elected.  He has not been specific about how he would do that, but his plan would include tax cuts to corporations and the people who own businesses.

He advocates extending the Bush-era tax cuts to all income groups, while Obama favors cuts for only those earning less than $250,000.   Most Congressional Democrats would agree to reverting to higher, pre-Bush taxes for those making $500,000 or more.

The president took aim Friday at Romney's emphasis on tax relief for the wealthiest Americans.

"Tax cuts when times are good, tax cuts when times are bad. Tax cuts to help you lose a few extra pounds. Tax cuts to improve your love life. It'll cure anything according to them," Obama asserted.

Long-term Fix

University of Minnesota economist V.V. Chari told KARE that politicians tend to create unrealistic expectations with their promises to change the economy in the short term.

"We're talking about relatively modest differences in outcomes over a two or three-year period," Professor Chari explained.

"Policy matters a great deal more when it comes to a period of a decade or longer."

Chari said many factors control economic growth, and an increasingly global economy make forecasting and controlling conditions inside the United States more difficult.

He said the best thing any President, or Congress, could do over the long-term, is serious address the nation's debt.  Currently six percent of the federal budget goes to interest on the debt, and that number is projected to grow to 12 percent in ten years.

He said without substantial reforms auto-pilot spending on Medicare, Medicaid and defense is on a trajectory to consume 90 percent of all the tax revenues within a decade.

The blueprint for those reforms has already been produced by various commissions, but will collect dust until the majority of lawmakers and the White House have the political will to say "no" to those who benefit from deficit spending.

"The American public is willing to hear 'no' in the abstract, but is decidedly unwilling to hear 'no' in the particular," Chari remarked.

"I think it's time for us as a nation to grow up and say we're going to have to do without certain kinds of things so we can have more of something else that we care about more."

Wall Street Journal economics editor David Wessel, in Minneapolis Friday delivering a speech to the Economic Club of Minnesota, also said the long-term solution will require political courage.

"We're not going to fix this problem without the bulk of the American people either paying more taxes or giving up something they've been promised by the government, or both," Wessel told KARE.

Wessel, who recently wrote a book on the topic, Red Ink, said fundamental reforms don't work well unless they're the result of a bipartisan agreement.

"It requires at least some temporary truce in the partisan warfare, to put the interest of the country paramount at the beginning; to do things that are unpopular but can be explained to people." 

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