- The Washington Times - Saturday, December 7, 2002

The nation's unemployment rate soared to 6 percent in November, delivering what one analyst called a "cold, hard slap in the face" about a sagging economy that many thought had already hit bottom for job seekers.
The jobless rate, up from 5.7 percent a month earlier, matched an eight-year high set in April.
The increase was a hard blow, said Bill Cheney, chief economist at John Hancock Financial Services. "There was something psychologically comforting about unemployment staying below 6 percent," he said.
The Labor Department released the report yesterday, less than an hour before word spread of a shake-up of President Bush's economic team. The White House, amid growing uneasiness about the ailing economy, requested the resignations of Treasury Secretary Paul H. O'Neill and chief economic adviser Lawrence Lindsey.
Companies slashed 40,000 jobs last month, the most since February, when 165,000 jobs were cut, the report showed. Economists had forecast modest job growth.
November's jobless rate was the same as in April, which had been the highest since July 1994, when it hit 6.1 percent.
Economists said the recovery, moving in fits and starts, is beginning to mirror that of the last recession, when Mr. Bush's father was president. High unemployment that did not start dropping until almost two years later helped cost him a second term, which his son has vowed not to repeat.
"We are having a replay of the jobless recovery," said Ken Mayland, an economist with ClearView Economics. "I think that's going to continue." Escalating business expenses, notably medical care and pension costs, are forcing companies to "keep their head count down," he said.
Analysts had thought the unemployment rate might tick up to 5.8 percent for November, with stabilizing layoffs and fewer workers seeking unemployment benefits in recent weeks.
That created optimism for the holiday shopping season, a hope that workers would be lining up at cash registers rather than at unemployment offices.
Consumer spending amounts to two-thirds of economic activity in the United States and has been the main force keeping the economic recovery more or less on track. November's sales were modest, and people worried about job security are expected to be frugal.
"The labor market remains weak," said Paul Kasriel, chief domestic economist at the Northern Trust Co. "Unfortunately, I don't see much on the horizon that's going to strengthen it."
The rate is expected to rise in coming months to as high as 6.5 percent. The number of people out of work for 27 weeks or more rose by 78,000, to 1.7 million last month. Nearly 1 million people will start running out of unemployment benefits three days after Christmas because Congress did not extend the payments before adjourning last month.
"Clearly the economy is still on the sick bed requiring some more treatment," said Sung Won Sohn, chief economist at Wells Fargo. "We are not out of the woods yet by any means."
The economy isn't growing fast enough to create jobs needed to absorb a growing pool of people looking for work. Analysts said the unemployment rate probably should have been estimated higher in previous months to reflect that.
The report showed that employment in the nation's factories continued to decline, with a loss of 45,000 jobs in that sector alone last month. Hiring also was down in retail, mostly because of weak employment at a time when stores typically staff up for the holiday shopping rush. Jobs were also cut in the communications industry.
Countering those job losses was an overall hiring increase in services. The health care industry accounted for more than half of the November increase, with notable gains in hospitals and nursing facilities.

Sign up for Daily Newsletters

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide