WASHINGTON -- Brace for a year of stubbornly high unemployment.
Gripped by uncertainty over the economic recovery, employers chopped 85,000 jobs last month, and difficulty finding work helped chase more than half a million people out of the job market.
The unemployment rate held steady at 10 percent. It did not creep higher only because so many people stopped looking for work and are technically not counted as unemployed.
But the jobless rate is likely to rise in coming months as more people see signs of an improving economy and start looking for work again. Some economists think it could near 11 percent, which would be the highest since World War II, by June.
The Labor Department's monthly jobs report suggested employers will remain wary about hiring and skeptical of the economy recovery.
The economy is growing, but too weakly to persuade employers to ramp up hiring. Growth has to be robust to drive down the jobless rate, especially as more people start looking for work.
Complicating the recovery are remnants of the recession: high debt, a sputtering housing market and the inability or reluctance of people and businesses to borrow and spend. Most economists think unemployment will rise this year and stay high into 2012.
That poses a threat to President Obama and Democrats in the fall congressional elections and escalated pressure on the administration to boost job creation. The "road to recovery is never straight," Obama said after Friday's report.
The president pushed for an expanded government program that he said would help create tens of thousands of new clean-technology jobs. Obama announced the awarding of $2.3 billion in tax credits to companies that manufacture green technologies. The money will come from last year's $787 billion stimulus program. He also called on Congress to approve an additional $5 billion to help create more such jobs.
Analysts had expected the economy to lose just 8,000 jobs in December. The loss of 85,000 was a setback after November, when, according to revised figures released Friday, the economy actually added 4,000 jobs, the first gains in nearly two years.
"The labor market is getting better, but it is still a long way from being healthy again," said Paul Ashworth, economist at Capital Economics Ltd.
The 85,000 lost jobs for the month is based on a government survey of employers.
A separate government survey of households found a much darker picture -- nearly 600,000 fewer people said they had jobs in December than in November.
That gap could reflect layoffs at small businesses that are having trouble getting loans and can't afford to hire new people. That's something many economists think the employer survey misses because it undercounts small companies.
It was the second straight month the unemployment rate was 10 percent. The only reason it didn't rise was that 661,000 people stopped looking for jobs and left the workforce.
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