CNBC.com

By: Jeff Cox
CNBC.com Senior Writer

The US economy created no jobs and the unemployment rate held steadily higher at 9.1 percent in August, fueling concerns that the US is heading for another recession.

It was the first time since World War II that the economy had a net zero jobs created for a month.

Economists had been expecting the report to show a net of 75,000 jobs created, an unusually low number considering the US is technically more than two years removed from the end of the last crisis.

Markets had been closely watching the August report in hopes that the employment picture would begin to show signs of recovery.

Stocks have slumped more than 10 percent since the beginning of May as concerns grew that the debt and deficit problem was beginning to overwhelm hopes of a recovery following the depths of the financial crisis in 2008 and 2009.

Stock market futures added to losses following the report, while bond prices rose.

Private payrolls actually created 17,000 jobs, but was offset by continued shrinkage in government. The number of people unemployed remained unchanged at 14 million.

"We're in this very flattish-type phase," said Liz Ann Sonders, chief market strategist at Charles Schwab in San Francisco. "The only relatively good news, and I would emphasize 'relatively,' is we're not in firing mode, not in a job less mode. We're in an extraordinarily slow job-gain mode."

The unemployment rate that counts those not looking for work rose to 16.2 percent, equaling the June rate and tied for the highest in 2011.

Average hourly earnings slid 3 cents to $23.09. The average duration of unemployment edged lower to 40.3 weeks from its previous record high of 40.4 weeks in July. However, the median level spiked from 21.2 to 21.8 weeks.

Among the more disturbing numbers: the amount of people "marginally attached to the labor force" rose to 2.6 million from 2.4 million. These are workers not included in the unemployment count because they had not sought work in the past four weeks but have looked in the past year.

Health care and mining saw more jobs in the month, but telecommunications and government both posted substantial losses. It was unclear how much impact the Verizon strike, where 45,000 walked off their jobs for two weeks, had on the total count. Many of those workers likely received paychecks during the Labor Department's counting period and may not be included in the number released Friday.

President Obama is set to deliver a speech to Congress on Thursday that will outline the administration's jobs plan as the 2012 election nears. The jobless rate has stayed stubbornly high during the president's term despite more than $800 billion in stimulus spending and the addition of more than $4 trillion to the national debt.

At the same time, the Federal Reserve span#ExplainsLink a, span#ExplainsLink a img, span#ExplainsLink a:visited img, span#ExplainsLink a:visited { border: medium none; } has expanded its balance sheet past the $2.5 trillion mark through monetary easing measures geared at boosting spending.

However, the economy remains mired at 1 percent growth, and a report this week showed manufacturing edging toward contraction levels.

"Jobs creation remains weak, because temporary tax cuts, stimulus spending, large federal deficits, expensive and ineffective business regulations, and increased health care mandates and costs do not address structural problems holding back dynamic growth and jobs creation-the huge trade deficit and dysfunctional energy policies," Peter Morici, economist at the University of Maryland, said in an analysis.

The report also showed that job creation in July, which originally came in better than expected, actually wasn't as good as thought. The 117,000 jobs originally announced was cut to 85,000, while June's number fell from 46,000 to a mere 20,000.

"Though much attention is being paid to ‘zero job growth’ in August, the real news in today’s numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate," Heidi Shierholz, economist at the Economic Policy Institute in Washington, D.C., said in a statement. "In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings."