U.S. unemployment rate hit 5.7 percent last month
By Martin Crutsinger
Associated Press
WASHINGTON — The nation's unemployment rate shot up to 5.7 percent in November as the job loss total for the past two months hit 800,000, the worst performance in more than two decades.
The Labor Department report yesterday showed just how devastating the Sept. 11 terrorist attacks were on the labor market, prompting huge layoffs across a wide swath of the U.S. economy, with airlines and other travel-related industries particularly hard-hit.
The worse-than-expected numbers also dashed hopes raised by other reports that the current recession, the country's first in 10 years, will soon be ending.
"The rumors of a recovery were premature," said David Wyss, chief economist at Standard & Poor's Co. in New York. "We are still in a recession and we will be for some months to come."
Wall Street fell on the news, with the Dow Jones industrial average closing down 50 points at 10,049.
President Bush and other Republicans used the dismal report to try to increase pressure on Democrats in Congress to drop their objections to the administration's economic stimulus program, which Bush sent to Congress in October.
"Since then over three-quarters of a million Americans have lost their jobs," Bush said in a statement. "Today's important economic warnings demonstrate that America's workers have already waited too long."
But Democrats charged that the rising unemployment level underscored their demands that Bush's package needs to be changed to offer less in tax cuts for the wealthy and more in help for thousands of people now out of work.
Analysts said the impasse over the stimulus bill made it more likely that the Federal Reserve, which has already cut interest rates 10 times, will cut rates an 11th time at their final meeting of the year next Tuesday.
Some predicted that the rate cut would be another half-point move, given the size of the job losses in November, but others looked for a smaller quarter-point move given that a key Fed interest rate is already at a 40-year low of 2 percent.
Labor Secretary Elaine Chao, briefing reporters on the jobless report, said that the widespread layoffs in the past two months were "signs of the economic havoc wrought on our country" by the terrorist attacks. "In March the economic expansion stopped and on Sept. 11 the bin Laden recession began," she said.
Economists, attributing part of the severity in the job cutbacks to the profit squeeze facing many corporations, predicted further layoffs in the months to come.
"With profit margins at a post-World War II low, hundreds of thousands of more jobs probably will need to go to restore profitability," said Bruce Steinberg, chief economist at Merrill Lynch.
He predicted that the recession will last through the winter and the jobless rate will climb close to 7 percent next year before a rebound in economic growth triggers new hiring. The last recession in 1990-91 saw the unemployment rate hit 7.8 percent with a job loss of 1.8 million
Business payrolls have declined for four straight months, but the job losses dramatically accelerated in October, when 468,000 jobs were cut, and November, when another 331,000 Americans lost jobs. That was the biggest two-month job drop since 1980.
A separate report yesterday showed that consumers, even in the face of rising layoffs, boosted their borrowing in October by $7 billion, a growth rate of 5.2 percent.
The 5.7 percent jobless rate last month followed an increase to 5.4 percent in October, the first month that layoffs from the terrorist attacks began to show up in the government statistics. Just a year ago, the unemployment rate was down to a 30-year low of 3.9 percent.
