Surge in unemployment likely
Advertiser Staff and News Services
As the nationwide jobless rate continues to rise — last week surging to a 5 1/2-year high of 5.6 percent for November — experts say indications are that it will keep rising in coming months as well.
"We are still hemorrhaging jobs at a pretty rapid rate," said Joseph LaVorgna, senior economist at Deutsche Bank Securities in New York. "It looks like we are a good deal away from an improvement in the job market."
With few jobs available, workers fired from companies such as Enron Corp., Palm Inc., and Kimberly-Clark Corp. have flocked to state claims offices to file for unemployment insurance.
In Hawai'i, the job market also is being affected — shrinking in October for the first time since early 1999, with the state losing approximately 1 percent of jobs compared with October 2000. Unemployment also rose to 5.3 percent, the highest level since October 1999.
More than 35,000 Hawai'i workers applied for jobless benefits in September, October and November — compared with 15,000 in the same period of 2000.
In October, the Sept. 11 terrorist attacks on New York and Washington led to the biggest nationwide drop in services jobs since 1983. Companies including Marriott hotels owner Lodgian Inc. and American Airlines parent AMR Corp. dismissed workers as travel dwindled.
Job cuts have mounted since then. Enron Corp., once the largest energy trader, last week cut 4,000 jobs at its Houston headquarters. Palm Inc., the biggest maker of handheld computers, last week said it would fire 250 workers in its third round of job cuts this year. Kimberly-Clark Corp., the top maker of U.S. diapers, last week said it would shut five plants and fire 1,400 employees as sales have slowed.
"We're headed for a 6 percent unemployment rate before this is all over," said Avery Shenfeld, senior economist at CIBC World Markets Inc. in Toronto, before the report. In November, the jobless rate probably rose to 5.6 percent, according to a Bloomberg News survey. The monthly employment report will be released tomorrow.
The report helps explain why Federal Reserve policy-makers are expected to lower interest rates again when they meet Tuesday even amid signs the economy may be starting to recover. The overnight bank lending rate, at 2 percent, is already the lowest in four decades.
The National Bureau of Economic Research has declared the United States is in a recession that started in March. In the third quarter, the economy contracted at an annual rate of 1.1 percent as consumer spending cooled, business spending slumped, and companies slashed inventories.
