Strong jobs report doesn't make economic worries vanish

— -- July's jobs report may have beat expectations, but it's too early to declare a turning point in the nation's start-and-stall economic recovery.

The 163,000 jobs that employers added is twice as many as either of the previous two months. But it's not much greater than the 133,000 average monthly pace since the economy began adding jobs again in February 2010.

Consistently strong monthly job gains are needed to lower the unemployment rate, which remains over 8%.

The underlying economic news this year is still worse than 12 months ago. The economy is slowing at midyear for the third year in a row, growing at an annual clip of just 1.5% in the second quarter, down from 4.1% late last year.

In 2011, signs were clear that the midyear lull would be temporary. Carmakers and other manufacturers were disrupted by the Japan earthquake, and the stock market fell 20% after Congress flirted with defaulting on the U.S. debt. But as supply chains came back online and Washington receded from the news, growth resumed.

This year, problems are just heating up. Europe's financial crisis figures to be front and center through the fall, especially with most of Western Europe back in recession. In the U.S., Congress has to figure out what to do about the expiring tax cuts and scheduled spending cuts at year end that make up the "fiscal cliff." Economists say the combination would cause a recession if nothing is done.

Economists including Bank of America Merrill Lynch's Ethan Harris say the prospect of the cliff is already freezing business investment and hiring, and dampening consumer spending. The impact of uncertain European and American policy is showing up in everything from consumer confidence to factory orders.

That means any real breakout from the slow-growth pattern is still a ways off. Some parts of the economy are improving, especially housing, but the two big clouds hovering over this year's economy aren't going to clear up so quickly.