Unemployment at 5-year high
WA S H I N G T O N — Businesses slashed jobs and the nation’s unemployment rate hit a fiveyear high in August, the government reported Friday, dashing hopes that the economy might stabilize in the second half of the year and showing that trouble has spread far beyond the housing and financial sectors.
As the economy weakened in the beginning of 2008, many economists held out hope that it would soon stabilize, or even improve. But with consumers spending less, the housing and stock markets dropping further, and a once-gradual decline in the job market turning into a steep slide, that doesn’t appear to be happening.
T he u nemploy ment rate rose to 6.1 percent, from 5.7 percent in July, according to the data released Friday, making for the most severe fourmonth rise in joblessness since 1981. More people looked for second jobs to help make ends meet, with little apparent success.
Meanwhile the nation’s employers cut 84,000 net jobs, the eighth straight month of declines. They have shed a combined 600,000 positions from their payrolls in 2008. O f m aj o r c a t e g o r i e s of employers, only the health-care industry and government added jobs in August.
“These are really ugly nu mbers,” sa id S c ot t Anderson, a senior economist at Wells Fargo. “There’s been optimism out there that we might be nearing an endpoint, that housing is stabilizing, that the stock market may have turned a corner. But this reinforces the view that things are going to get worse before they get better.”
The dismal numbers released Friday go beyond the job market. Mortgage foreclosures rose 1.2 percent in the second quarter, according to the Mortgage Bankers Association, the sharpest rate of increase in the 29-year history of the group’s survey. Earlier in the week, many of the nation’s largest chain retailers announced disappointing August sales numbers, indicating that the back-to-school selling season was a bust. Automakers have been hurting, too. Ford said that it doesn’t expect a rebound in vehicle sales this year and that it is cutting production by another 50,000 cars and trucks.
Economic data from the late spring and summer had been reasonably positive, party because government stimulus payments went out during that period, and exports b o omed. F u r t her t a x rebates are not likely this year, however, and the slowing European and Asian economies are likely to lessen demand for U.S. exports.
“We’re seeing what the emperor looks like disrobed,” said David Rosenberg, chief economist at Merrill Lynch. “We had the largest fiscal rebate package of all time in the second quarter, and it was big enough to keep GDP positive, but we’re now entering the consumer leg of this economic downturn.”