Jobless rate bolts to 8.1%, 651K jobs lost

The nation’s unemployment rate soared to 8.1 percent last month, the highest in 26 years, as employers eliminated another 651,000 jobs, the Labor Department reported Friday morning.

Jobs were lost in virtually every corner of the economy, with huge declines ranging from 100,000 to 200,000 in manufacturing, construction and business services. Even the normally robust health and education sectors managed to eke out only a 26,000 job gain during the month, and once bountiful state and local government jobs all but disappeared.

The enormous job losses since November have brought the total of jobs cut during the recession to 4.4 million, with more than half of that since a severe financial crisis broke out last fall. Job losses in January and December that previously were reported in the 600,000 range were revised by the department to be even more enormous, and are now closer to 700,000.

“There’s no place to hide” from an economic storm that is the worst in a generation, said Beth Ann Bovino, senior economist at Standard & Poor’s Corp. No sector of the economy has been left untouched as the worst banking and credit crisis since the Great Depression sweeps through the economy and takes down victims.

Just about the only nugget of good news in the jobs report was that average hourly earnings held up pretty well with a 3.6 percent increase in the last year. But because of cuts in hours at manufacturers, weekly earnings were up only by 2.1 percent — about half the gains seen a year ago.

Ms. Bovino said she expects wage gains to moderate further this year as sharply rising joblessness zaps the earning power even of people who still are working.

Consumers, with less income to spend and increasingly fearful about their jobs, have pulled back spending in a way not seen in decades in the United States.

U.S. consumers are the main engine of growth not only in the U.S. economy but in much of the rest of the world. They have been completely spooked by the unprecedented jump in joblessness in recent months, which has sent consumer confidence to record lows.

While every group of workers has been hit by massive layoffs, the recession has been particularly hard on the most vulnerable groups: young workers and minorities. Teenage unemployment soared to 21.6 percent last month, while the rate among Hispanics lept by 1.2 percentage points to 10.9 percent.

One reason unemployment grew so quickly last month is nearly 500,000 workers surged into the labor force looking for jobs even as employers were eliminating another 350,000 positions, according to the department’s household survey.

The total of unemployed persons in the U.S. now stands at 12.5 million, out of a labor force of 154.2 million workers.