- The Washington Times - Saturday, November 3, 2001

The nation's unemployment rate last month rose to 5.4 percent and the economy lost another 415,000 jobs as the September 11 terrorist attacks provoked the biggest dislocation of workers in decades, the Labor Department reported yesterday.
In the last year, businesses have cut 2.2 million jobs and the unemployment rate has risen 1.5 percentage points, a half point in one month. The figures provide the best evidence yet that the economy is sinking into recession, analysts said.
"The job market collapsed in October," said Joel Naroff of Naroff Economic Advisers. "The carnage was universal," with major job losses from manufacturing to construction, transportation, retailing and services.
Businesses were most aggressive in slashing temporary jobs, which were eliminated at a record pace, but they also reduced the hours and wage gains of the 132 million workers who still hold jobs. As a result of the lower incomes, consumers will have less money to spend in the months ahead and economic growth will be jeopardized.
The report showed that the pain caused by the attacks was widespread, resulting in a surge in the number of discouraged workers, people forced to take part-time work and those unemployed for an extended period.
Separate figures from the department show that claims for jobless benefits skyrocketed locally last month, from a 70 percent rise in Virginia to 148 percent in the District over a year ago.
"There was nothing even remotely positive in the report," said Mr. Naroff. "We are suffering from a lack of confidence and reports like these don't help at all."
The half-point jump from September's 4.9 percent jobless rate was the biggest increase since 1980, when the figure was 7.1 percent. The unemployment rate is at its highest level since December 1996.
The unemployment news "creates a problem of the highest order" for the Federal Reserve, he said, and almost certainly will prompt the central bank to slash interest rates by another half-percentage point Tuesday.
On Wall Street, the news at first sent stocks down, but they later recovered amid hopes the report will prompt vigorous action by the Fed and Congress to resuscitate the economy.
"It's not good news for America," President Bush said after meeting with his economic advisers. He said he wants to work with Congress to quickly pass an extension of unemployment benefits for workers who lost their jobs after the attacks, while enacting tax cuts aimed at increasing job opportunities.
Sophia Koropeckyj, an analyst with Economy.com, said the employment report was "one of the worst ever." Analysts had expected a bleak showing after the terrorist attacks, but few had anticipated losses so deep. Many had thought, for example, that the manufacturing sector could not lose another 142,000 jobs after shedding a million in the year before the attacks.
"This leaves no doubt that the economy is in recession," said Jerry Jasinowski, president of the National Association of Manufacturers. But he noted that the hemorrhaging spread well beyond the nation's factories, which bore the brunt of the economic slowdown in the past months.
"Clearly, this recession is no longer confined to manufacturing," he said. "The attacks have had a stunning impact on our economy."
The airline, tourism and hospitality industries shed a disproportionate share of jobs, and the sharpest increases in unemployment were among minority groups that only in recent years had managed to break the cycle of unemployment. The jobless rate among blacks jumped to 9.7 percent from 8.7 percent, and the Hispanic rate jumped to 7.2 percent from 6.4 percent.
Senate Majority Leader Tom Daschle said the report underscores the need to beef up unemployment and health benefits for dislocated workers. Democrats are pushing for broader benefits covering more workers than the $14 billion package being pushed by the administration. They would devote $35 billion of the $75 billion economic stimulus package to such benefits.
"We're going to move as expeditiously as we can, but I think we've got to do the right thing," said the South Dakota Democrat.
Senate Republicans and the administration argue that the business investment tax breaks proposed by Mr. Bush are more effective in getting businesses to create jobs for displaced workers than the Democratic plan.
"It's not to give folks a check for today, but to give them a job for tomorrow," said Senate Minority Leader Trent Lott, Mississippi Republican.
R. Glenn Hubbard, chairman of the White House Council of Economic Advisers, said yesterday's report suggests that the economy may contract again in the final quarter of the year after declining 0.4 percent in the summer quarter in a classic definition of a recession.
"The likelihood of that is quite high, relative to what it would have been before September 11th," he said. But if Congress moves quickly to enact the "core elements" of Mr. Bush's stimulus plan, that would help to restore growth and add about 300,000 jobs next year, he said.
Congress at this point could not pass legislation in time to help restore growth this year, he said. It would have to act in the next two weeks to affect holiday spending, he said. Both Mr. Bush and Democrats have proposed sending $300 tax rebates to low-income taxpayers who did not get rebates this summer.


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