Unemployment Hits 26-Year High Of 9.7 Percent
Friday, September 4, 2009
The nation's unemployment rate jumped to 9.7 percent in August, even as employers shed fewer jobs than predicted for the month — a mixed signal for an economy that many believe is on the mend after its worst slump in decades.
The latest data from the Labor Department showed employers eliminated 216,000 jobs last month. That represents the smallest decline in payrolls in a year. That better-than-expected figure was offset by a 73,000-strong increase in the labor pool, an indication that some laid-off workers who had given up looking for work were again in the market.
Analysts had expected the jobless rate — now at its highest level since June 1983 — to tick up to 9.5 percent from 9.4 percent in July. But they also thought payroll reductions would total 225,000.
The number of jobs lost last month is a far cry from the 600,000 or more jobs shed each month during the winter and spring. It's an encouraging sign despite the higher unemployment rate, says Stuart Hoffman, chief economist of PNC Financial Services Group.
"We're at the point where the slowdown in layoffs will lead to some hiring and job gains, not in the next few months but probably by the first part of 2010," Hoffman told NPR.
His assessment echoed what Federal Reserve policymakers said last month when they forecast that the economy would pull out of recession in the second half of the year.
The minutes of that Fed meeting, released Wednesday, said market conditions remained "poor" and that the many companies were likely to be "cautious in hiring" even as the economy picks up. Many private economists, and the Federal Reserve, expect the unemployment rate to top 10 percent by the end of this year.
Economist Hugh Johnson said there's good news and bad news in the Labor Department report.
But "generally speaking ... the report tells us that the economy continues to contract, although it's not contracting at as severe a pace as we saw in the first part of the year," he told NPR.
Some economists credit the Obama administration's $787 billion economic stimulus package of tax cuts and spending increases, along with the Cash for Clunkers program, with contributing to a recovery.
But they worry about what will happen when the impact of the stimulus efforts fades next year.
In remarks at the G-20 meeting of finance ministers Thursday in London, Treasury Secretary Timothy Geithner said fears persist that curtailing government spending and monetary stimulus too soon could result in a "double dip" recession.
"You're seeing the first signs of positive growth now in this country and countries around the world," Geithner said. "We've come a very long way, but I think we have to be realistic. We've got a long way to go still."
Christina Romer, chairwoman of the White House Council of Economic Advisers, told CNBC television Friday that "the trajectory is in the right direction."
Meanwhile, more job cuts were announced this week. Washington-based industrial technology firm Danaher Corp. said it will lay off about 3,300 of its roughly 50,000 employees, an increase from the 1,700 cuts it announced in the spring. American Airlines said it will cut 921 flight attendant jobs as it deals with an ongoing downturn in traffic and lower revenue.
The construction sector — hit hard by a precipitous drop in housing and commercial real estate — lost 65,000 jobs. Factories slashed 63,000 jobs, and retailers shed 9,600. The financial sector lost 28,000 positions, while professional and business services dropped 22,000. Even the government lost 18,000 jobs, as the U.S. Postal Service announced 8,500 cuts.
Health care and educational services was the only bright spot, adding 52,000 jobs.
The Labor Department report said the rate of underemployment — a measure that includes people who have either given up on looking or settled for part-time work — reached 16.8 percent, the highest on records dating from 1994.
The number of weekly hours worked remained at 33.1, above the low of 33 reached in June. Economists think companies will add more hours for current workers before hiring new ones.
Since the start of the recession in December 2007, 6.9 million jobs have been lost. There are now 14.9 million unemployed Americans.
From NPR staff and wire reports
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