Unemployment Rate Jumps to 8.5 Percent

http://www.washingtonpost.com/wp-dyn/content/article/2009/04/03/AR2009040300680.html

Unemployment Rate Jumps to 8.5 Percent, 663K Jobs Lost in March
Unemployment Rate Highest Since 1983
By Annys Shin
Washington Post Staff Writer
Friday, April 3, 2009

The nation's unemployment rate shot up from 8.1 to 8.5 percent last month, new figures out today show, as employers continued to slash jobs in the face of slumping demand.

The economy shed 663,000 jobs in March, the fourth straight month in which job losses have topped 600,000, according to Labor Department data.

A total of 5.1 million jobs have been lost since the recession began in December 2007, and more than 13 million people are unemployed.

The labor market is actually weaker than the official unemployment rate indicates. Groups excluded from the official count include people who are working part time but would rather be working full time, people who want to work but haven't looked for a job in the past month, and people who have become discouraged and given up looking. If those groups are included, the unemployment rate is 16.2 percent, up slightly from February.

The employment report casts a cloud over recent signs that the recession might be hitting bottom. Earlier this week, new orders for manufactured goods rose unexpectedly, suggesting the pace of that sector's decline may be slowing. Government data out Wednesday also showed the fall-off in construction spending starting to moderate.

However, it takes substantial improvement in the economy for employers to stop job cuts and to resume hiring, and economists say the worst days for the labor market will continue for some time. During recessions, unemployment tends to keep rising even after a recovery begins.

The last time the unemployment rate hit 8.5 percent was November 1983, after peaking at 10.8 percent in 1982. A growing number of economic forecasters now say they expect the unemployment rate to reach 10 percent sometime next year.

Job losses in March were spread over all sectors, with the exception of health care, which added jobs. Manufacturing lost 161,000 jobs. Construction lost 126,000, as a long-anticipated decline in non-residential construction set in. Professional and business services lost 133,000 jobs, with more than half of those losses coming from temporary help services, another sign that employers don't expect business to pick up for a while.

Rising unemployment will further dampen consumer spending, analysts said, and make it harder for households to cover their debts.

Wachovia economist John Silvia said today in a note to clients he was also troubled by the rise in the duration of unemployment. "Such increases suggest that the impact on those losing jobs will be longer and more severe. Therefore we expect greater financial stress, credit delinquencies and foreclosures."