Goodbye jobs, hello QE3?

By Nin-Hai Tseng, writer-reporter June 3, 2011: 10:22 AM ET

It's official: Most economists have been way too optimistic about pace of the economic recovery. Will the latest jobs numbers spur the Fed to act again?

FORTUNE -- Virtually everyone has been wishfully thinking that what's been slowing down the U.S. economy was only temporary. But the spate of crushingly disappointing economic data has all but confirmed that most economists have been way too optimistic, and that the problems ailing markets are not going to disappear anytime soon.

Start with today's unnerving unemployment figures, which will no doubt lead to calls for the Fed to step in and play doctor again. After several months of strong hiring, job growth slowed sharply in May, adding only 54,000 nonfarm payroll jobs. This compares with an increase of 232,000 jobs in April. The unemployment rate ticked up 9.1% from 9.0% in April. The figures were dramatically lower than expected -- economists had been predicting a rise of 160,00 payrolls and a slight drop in the unemployment rate, to 8.9%.

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