The unemployment rate surged to 9.7 percent in August, signaling that joblessness and financial anxiety were likely to endure in millions of American homes for many months.
Sergio Fuentes sought help from a state worker while looking through listings in San Jose, Calif.
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Today's Business: Jack Healy on the Jobs Report 
The Labor Department’s latest employment report, released Friday, added weight to a growing belief that, at least technically, the economy had already escaped the grip of recession. Though 216,000 net jobs vanished in August, the losses continued to moderate from their worst numbers of the year.
Yet the report also lent credence to a deepening consensus that, even as the economy resumes expansion, the recovery was likely to be weak, prompting most companies to hold back from aggressive hiring.
“In the context of a full-blooded recovery, this report is disappointing,” said Alan Ruskin, an economist with the Royal Bank of Scotland in Stamford, Conn. “We’re still clawing our way back.”
Many experts envision a jobless recovery, in which the economy grows but job losses persist. That would reprise the end of the last recession in 2001, when payrolls continued to decline for nearly two years afterward.
Such an outcome would confront the Obama administration with a potentially nettlesome political problem heading into next year’s midterm elections. After the government unleashed $787 billion to stimulate economic growth, and after it bailed out financial institutions and the auto industry, the unemployment rate exceeds worst-case projections envisioned by the administration early this year.
On Friday, Jared Bernstein, the top economic adviser to Vice President Joseph R. Biden Jr., said the picture would look far worse were it not for the stimulus spending. He added that more help was on the way as the government distributed the remaining two-thirds of the package.
“Our interventions have contributed to significant cuts in the rate of job loss,” Mr. Bernstein said. “We’re headed in the right direction, but we’re far from out of the woods. There are simply too many Americans seeking work.”
If the jobless rate continues to climb, as is widely expected, that could generate pressure for another stimulus spending package. But given intensifying concern about the size of federal budget deficits — now projected to exceed $9 trillion within a decade — any new spending could be politically perilous.
The latest snapshot of the nation’s labor situation testified to the drastic improvement since early this year, when nearly 700,000 jobs a month were disappearing. Yet it also underscored the continued bleakness of the economic landscape.
“It’s a good picture compared to where we were, which was just a free fall,” said Dean Baker, a director of the Center for Economic and Policy Research in Washington. “But compared to anything else, this is just a horrible report. The rate of decline is slowing, but it’s not going to stop. We’re likely on a path toward more than 10 percent unemployment.”
Most economists see recent improvements as the result of pulling away from the disaster of last fall — when the investment giant Lehman Brothers collapsed, spreading fear throughout the financial system — and not a sign of vigorous growth ahead.
After years of borrowing against soaring home values, tapping credit cards and harvesting stock market winnings to spend in excess of their incomes, millions of households are being forced to conserve. That limits consumer spending, which makes up 70 percent of the nation’s economy. And that makes businesses that might otherwise hire and expand more inclined to hunker down.
“Household balance sheets are shot,” Mr. Ruskin said. From here, spending “has to come from income, and income has to come from employment, and at this juncture it looks like employment will only improve very slowly.”
The unemployment rate is up from 9.4 percent in July, when the economy lost 276,000 jobs.
The jobs report underscored the broad reach of the labor crisis, which has imposed austerity even on those still employed. In the last year, average weekly earnings have increased by only 0.8 percent — a decline, after factoring in the rising cost of goods. So many companies have trimmed working hours that paychecks have shrunk.
The so-called underemployment rate — which counts the jobless along with those working part time because their hours have been cut or they cannot find full-time jobs — reached 16.8 percent in August.
In recent months, the economy has benefited from a slowdown in the pace at which businesses have slashed inventories, prompting factories to expand production. Auto sales have been aided by the cash-for-clunkers program, which gave buyers incentives to trade in cars. Home sales have been stimulated by a tax credit for first-time homebuyers, an inducement that expires in November.
After those programs wear off, the nation may again confront a fundamentally weak economy.
“Everybody is looking around saying, ‘Where is a robust recovery going to come from?’ and not finding it,” said Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute in Washington. “We’re going to have elevated unemployment for four years to come.”
In Williamsburg, Va., Ginny Hoover, 49, has remained unemployed since she lost her job at a pharmaceutical company in November 2007. She has maxed out her credit cards and borrowed money from friends. She broke her apartment lease and moved in with her boyfriend. But other than an offer to sell insurance door-to-door for commissions only, she has found no work.
“I thought maybe a month or two and I’d have another job,” Ms. Hoover said. “I never would have guessed that it would be as brutal as it was out there.”
Despite increased factory production, manufacturing shed 63,000 jobs in August. Construction lost 65,000 jobs. Health care remained a rare bright spot, adding nearly 28,000 jobs.
“I don’t think businesses will hire back anytime soon,” said Allen Sinai, chief global economist at Decision Economics. “Companies are rewarded by the stock markets for not hiring and keeping their costs down. We will see another jobless recovery.”
In Delray Beach, Fla., Donna Angelillo lost her job as a property manager in May and quickly exhausted her savings. Her $1,000 monthly unemployment check does not cover her $1,030 monthly rent.
Jobs are scarce, she said. Past-due bills are abundant.
“I don’t have September rent, but right now I’m more concerned about the electricity,” she said. “Either today or tomorrow, they’re going to shut it off. I’m getting desperate.”
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