Job losses are highest in 21 years
By Leigh Strope
Associated Press
WASHINGTON — The nation's unemployment rate shot up to 5.4 percent in October and job losses surged to the highest level in more than two decades as the full brunt of the terrorist attacks hit an already weak economy.
Economists said they no longer had any doubt that the country was in recession and warned that it could be deeper and longer than they initially thought.
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Bureau of Labor Statistics
stats.bls.gov/
"We are clearly in the throes of a nasty recession," said Bill Cheney, chief economist with John Hancock Financial Services.
Job losses touched every part of the economy, not just airlines, hotels, restaurants and other travel-dependent industries, the Labor Department reported yesterday.
The surprise? "The magnitude of the declines and how broad-based they were," said Mark Zandi of Economy.com. "It was pretty clear the report was going to be bad, but this was beyond bad in every way."
Businesses slashed 415,000 jobs in October, the worst monthly cut in payrolls since May 1980. Those widespread job losses catapulted the unemployment rate from 4.9 percent in September to 5.4 percent last month — the highest since December 1996.
"It's not good news for America," President Bush said, urging the Senate to quickly pass an economic revival package. He said the Sept. 11 terrorist attacks had not only taken thousands of lives but had also "threatened the livelihoods of thousands of American workers."
On Wall Street, the weak report initially pushed stocks lower. But the Dow Jones industrial average recovered ground later and closed up more than 59 points at 9323.54.
On Capitol Hill, Republicans and Democrats both seized on the new jobless figures to push their own plans to jump-start the economy. Despite Bush's demand for a stimulus plan by Nov. 30, it remains unclear how both sides will resolve their differences over tax cuts versus increased spending to help unemployed workers.
Since October 2000, businesses have cut 2.2 million jobs and the unemployment rate has risen 1.5 percentage points.
Economists still hope for a recovery in the first part of next year and anticipate a 10th interest rate cut this year when the Federal Reserve meets Tuesday. The jobless report raises the likelihood of a bolder, half-point rate reduction rather than the previously expected quarter point.
Christmas may not bring good cheer to the economy. Retailers, who typically start adding jobs for the holidays in October, instead cut 81,000 jobs, marking their third-straight month of layoffs.
"Christmas could be a complete washout, and that would be very hard on the economy headed into next year," Zandi said. Consumer spending accounts for two-thirds of the nation's economic activity and has been keeping the economy afloat.
Orders to American factories tumbled by 5.8 percent in September to $313.1 billion, the lowest level since March 1997, the Commerce Department said in a separate report yesterday.
Transportation equipment, including cars, took the biggest hit with orders plunging by 15.8 percent. Orders for computers, industrial machinery and household appliances also fell.
The jobs report capped a week of dismal economic news. On Tuesday, a report showed consumer confidence plunged to a 7 1/2 -year low. A day later, the government said the economy contracted in the third quarter.
On Thursday, the government reported consumers cut back on their spending in September by the largest amount in nearly 15 years. The National Association of Purchasing Management on the same day said manufacturing activity had sank to its lowest level since February 1991, when the country was mired in its last recession.
Manufacturing has been hardest hit by the economic slump and has been enduring a recession of its own for months. In October, an additional 142,000 manufacturing jobs were cut, bringing total losses since March to more than 800,000.
In the airline industry, employment fell by 42,000, and in the travel sector 11,000 jobs were cut in October. The government said the job losses reflected fallout from the attacks.
In the service sector, typically the engine of job growth in the country, employment dropped by 111,000 in October, the fourth and largest decline this year. Particularly large job losses occurred at hotels and temporary help firms.
