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Off the Job: U.S. jobless rate shoots up to 6.1 percent as employers drop 84,000 from payrolls
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In the months ahead, the U.S. unemployment rate is expected to rise even higher than last month's 6.1 percent.
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Published: September 6, 2008
WASHINGTON
The nation's unemployment rate bolted above the psychologically important 6 percent level last month for the first time in five years -- and it's likely to go even higher in the months ahead, possibly throwing the economy into a tailspin as Americans pick a new president.
A blizzard of pink slips pushed the jobless rate from 5.7 percent in July to 6.1 percent in August, the Labor Department reported yesterday. Such a sharp rise is usually a strong recession warning, and it dashed investors' hopes for a late-year recovery.
Worried about the economy and their own business prospects, employers cut payrolls by 84,000 in August, marking the eighth straight month of losses.
So far this year, a staggering 605,000 jobs have vanished -- slightly less than the population of Alaska. The economy needs to generate more than 100,000 new jobs a month for employment to remain stable.
Richard Yamarone, an economist at Argus Research, said he fears that the jobless rate will cause consumers and businesses to "move from a moderately concerned stage to outright fear" and reduce spending even more.
A toxic trio of housing, credit and financial problems has badly shaken the economy, and the crisis shows no signs of letting up. It's the public's top worry, and many experts believe that the situation will get worse before it gets better.
August's unemployment statistics for North Carolina will be available in about two weeks, with numbers for the Triad to be available in about three weeks. In July, the unemployment rate in the Triad hit a six-year high at 7.1 percent, according to statistics from the N.C. Employment Security Commission. The jobless rate in the Winston-Salem metropolitan statistical area rose to 6.6 percent from 5.9 percent in June. The MSA comprises Davie, Forsyth, Stokes and Yadkin counties.
The jumps in unemployment mean that many companies will feel pressure to cut their business investments -- either in capital projects or hiring -- for the rest of the year.
The number of unemployed in the United States rose to 9.4 million in August, compared with 7.1 million a year ago. Economists predict more job losses ahead, pushing the unemployment rate to 7 percent by the fall, according to some projections. Against this backdrop, a growing number of analysts predict that the economy will jolt into reverse in the final three months of this year and possibly in the first three months of next year, meeting a classic definition of a recession.
The economy shrank late last year and barely budged at the start of this year. Growth picked up in the spring, thanks to brisk exports and the government's tax rebates, but that wasn't expected to last.
Slower growth overseas will probably cause exports to fall off just as Americans are cutting their spending and the benefits of the rebates disappear.
Job losses were widespread at factories -- especially housing-related manufacturers and automakers -- as well as construction companies, retailers, mortgage brokers, real-estate companies, hotels and motels and temporary-help firms, which are looked at as a barometer of demand for future hiring. Those losses swamped employment gains in government, education, health care and elsewhere. After the last recession in 2001, the unemployment rate rose as high as 6.3 percent in June 2003.
Some groups are being hit harder than others. The jobless rate for blacks jumped to 10.6 percent last month, the highest since late 2005. And, the unemployment rate for Hispanics rose to 8 percent, a five-year high.
The latest employment snapshot was worse than economists forecast. They were expecting payrolls to drop by around 75,000 in August and the jobless rate to tick up a notch, to 5.8 percent.
A separate report showed that a record 9.2 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, according to the Mortgage Bankers Association.
Locally, the number of foreclosure filings reported in North Carolina in July rose 127 percent to 4,303, compared with July 2007, RealtyTrac Inc. said this month. The number of filings was up 24.2 percent compared with June.
There were 270 foreclosure filings in the Winston-Salem MSA during July, up from 234 in June and up from 98 in July 2007. The Winston-Salem MSA consists of Davie, Forsyth, Stokes and Yadkin counties.
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