Posted on: Friday, July 4, 2003
Recovery hopes stall on rise in jobless rate
By Peter G. Gosselin
Los Angeles Times
WASHINGTON — The United States produced more fired workers than economic fireworks last month as the unemployment rate shot to a nine-year high of 6.4 percent and payrolls shrank by 30,000, the Labor Department said yesterday.
The June payroll decline extended the economy's job-losing streak to five months. Employers have dumped 394,000 workers since February, and 2.6 million since the March 2001 start of the recent recession.
The new figures dampened hopes that tax cuts and Federal Reserve-engineered interest rate reductions will propel the economy to a quick comeback.
"It's not a pretty picture for a recovery," said Los Angeles economic consultant Ted Gibson. "To keep losing jobs when most people think the recession ended a year and a half ago is really unprecedented."
The June numbers did include some hints of improvement. Part of the reason for the rise in the unemployment rate was an increase in the number of people looking for work, sometimes an early indicator of economic rebound. The report said the civilian labor force grew by 611,000 last month. In addition, another harbinger of recovery, temporary help hiring, was up by 38,000.
But yesterday's numbers, coming as the country prepared to celebrate Independence Day, set off a political uproar with Democrats blasting President Bush over the economy's performance while the administration generally sought to avoid the subject.
"The Republicans' multitrillion-dollar failed economic policy is one of the greatest disasters for working Americans in a decade," said Sen. Jon Corzine, D-N.J., chairman of the Democratic Senatorial Campaign Committee.
"Tax cuts have helped to create jobs and promote growth in the economy," countered outgoing White House press secretary Ari Fleischer.
The jump in the June jobless rate from May's 6.1 percent to 6.4 percent was the biggest monthly increase since the September 2001 terror attacks and took analysts, who had predicted little or no change, by surprise. The last time the rate was higher was in April 1994.
There were other positive signals. An industry group reported that the nation's huge service sector expanded for a third straight month. The Institute for Supply Management's index for nonmanufacturing companies rose to 60.6, its highest level since September 2000.
But analysts said the problem with these hints of promise is just that — that they remain only hints.
"There are great expectations for a turn-around in the economy, but there's nothing in these numbers to suggest that it's turned yet," said Mark Zandi, chief economist of West Chester, Pa.-based Economy.com.
