Nation hit with biggest unemployment hike since 1986
Help-wanted signs are vanishing along with jobs, so the unemployment rate is likely to keep climbing, a government report indicated, underscoring the toll the housing and credit crises are taking on jobseekers, employers and the economy as a whole.
Adding to the pain, oil prices soared to a new record high, while the value of the dollar fell. The Dow Jones industrials tumbled almost 400 points Friday.
The White House snapped into crisis-management mode. The president is now considering further plans to help energize the economy, which had already been teetering on the edge of recession, said counselor Ed Gillespie. Bush acknowledged, ‘This is a time of turbulence in the housing market and slow growth for our overall economy.’
Pounded by soaring energy prices and plagued by uncertainty, nervous employers clamped down further on hiring in May.
Just in the past several days General Motors Corp., United Airlines and others have joined the flurry of job-cut announcements.
The unemployment rate shot up from 5 percent in April, reflecting more workers losing their jobs as well as an influx of young people looking for work. It was the biggest over-the-month swing in the rate since February 1986. The increase left the jobless rate at its highest since October 2004.
The unemployment rate for blacks climbed to 9.7 percent, the highest since late 2005. The rate for teenagers rose to 18.7 percent, the highest in five years. The rate for Hispanics held steady at 6.9 percent.
Economists believe the 5.5 percent nationwide unemployment rate may overstate the weakness in the job market. But they still say it’s heading higher. Some predict it will hit 6 percent or higher early next year.
‘Employers are uncertain about where the economy is going, so they are more cautious than they would normally be in pulling the hiring trigger,’ said Tig Gilliam, chief executive officer of Adecco North America, a placement and recruiting firm.
Both employers and workers, he said, are now inclined to look locally. The housing bust has made it difficult for people to sell their homes and relocate for new jobs. And galloping gas prices are making some jobseekers draw a line on commuting longer distances.
Drivers are now paying an average of $3.99 for a gallon of regular gas nationwide, according to AAA and the Oil Price Information Service. In many parts of the country, the price is already well over $4. Oil prices had been easing but surged higher on Friday, climbing above $139 a barrel at one point.
A year ago, the number of unemployed stood at 6.9 million and the jobless rate was 4.5 percent.
Bush said the employment snapshot was ‘clearly a sign that is consistent with slow economic growth.’
Jobless woes
Friday’s Labor Department report was filled with sobering numbers:
‘ Employers eliminated 49,000 jobs in May, the fifth straight month of nationwide losses.
‘ The number of unemployed people grew by 861,000 to 8.5 million.
‘ Job losses for the year reached 324,000.