651,000 jobs lost as US hits 25-year jobless high
Sunday, 8 March 2009
WASHINGTON, Mar 7 (AFP): The US economy hemorrhaged 651,000 jobs in February, pushing the unemployment rate to a 25- year high of 8.1 per cent, according to official data Friday pointing to an ever-deepening recession.
The number of confirm job losses in the Labor Department report was in line with most forecasts but underscored the dire state of the economy as companies slash jobs to cope with an intensifying slump.
The department also sharply pushed up estimates for losses for the previous two months -- 655,000 in January from 598,000, and 681,000 in December from 577,000. That made December's losses the worst on record since October 1949, officials said.
The unemployment rate rose from 7.6 per cent in January to 8.1 in February, the highest since December 1983.
"It's ugly and always seems to be uglier than the previous month," said Robert MacIntosh, chief economist at investment firm Eaton Vance. "It's a deep and dark recession."
MacIntosh said the report suggests a long road to recovery for the battered economy.
"I think you have to go into 2010 to actually start to see growth," he said.
President Barack Obama said the "astounding" figures would cause him to redouble efforts to promote economic recovery.
"This country has never responded to a crisis by sitting on the sidelines and hoping for the best," Obama said in Columbus, Ohio.
"We have a responsibility to act, and that's what I intend to do as president."
The jobs report underscores the challenges facing Obama's administration in stabilizing a teetering financial system and pulling the shrinking economy out of a downward spiral.
Based on the most recent government estimate, US gross domestic product contracted at an eye-popping 6.2-percent pace in the fourth quarter of 2008, and some analysts say the downturn may be even worse in the first quarter of 2009.
"There is no silver lining here," said Nigel Gault, economist at IHS Global Insight. "The recession is deepening; there is no sign yet even that the rate of contraction is slowing."
Aaron Smith at Economy.com said the jobless rate could accelerate to 10 percent, making it harder for the US to pull itself out of the slump.
"The deteriorating job picture threatens to magnify the recession by further undermining income, spending and confidence," he said.
"Although the government's aggressive policy response will help, it will take time," he said.
Yet some said there were modest signs of hope amid the gloom due to a small improvement from December and January.
"It was an awful report but it was not a death spiral report," said Cary Leahey, senior economist at Decision Economics, who said some had been bracing for losses of up to one million jobs.
"While things are terrible, we are tracking the 1981-82 recession very closely."
Leahey added that with tax cuts and various financial rescues taking hold, "I don't see why the economy can't bottom in the next three to six months."
Robert Brusca at FAO Economics said the report suggested the worst job losses are past: "The revisions have made the trend looking ahead much less bad.... The pattern of declines no longer points to a continuing deceleration."
The number of confirm job losses in the Labor Department report was in line with most forecasts but underscored the dire state of the economy as companies slash jobs to cope with an intensifying slump.
The department also sharply pushed up estimates for losses for the previous two months -- 655,000 in January from 598,000, and 681,000 in December from 577,000. That made December's losses the worst on record since October 1949, officials said.
The unemployment rate rose from 7.6 per cent in January to 8.1 in February, the highest since December 1983.
"It's ugly and always seems to be uglier than the previous month," said Robert MacIntosh, chief economist at investment firm Eaton Vance. "It's a deep and dark recession."
MacIntosh said the report suggests a long road to recovery for the battered economy.
"I think you have to go into 2010 to actually start to see growth," he said.
President Barack Obama said the "astounding" figures would cause him to redouble efforts to promote economic recovery.
"This country has never responded to a crisis by sitting on the sidelines and hoping for the best," Obama said in Columbus, Ohio.
"We have a responsibility to act, and that's what I intend to do as president."
The jobs report underscores the challenges facing Obama's administration in stabilizing a teetering financial system and pulling the shrinking economy out of a downward spiral.
Based on the most recent government estimate, US gross domestic product contracted at an eye-popping 6.2-percent pace in the fourth quarter of 2008, and some analysts say the downturn may be even worse in the first quarter of 2009.
"There is no silver lining here," said Nigel Gault, economist at IHS Global Insight. "The recession is deepening; there is no sign yet even that the rate of contraction is slowing."
Aaron Smith at Economy.com said the jobless rate could accelerate to 10 percent, making it harder for the US to pull itself out of the slump.
"The deteriorating job picture threatens to magnify the recession by further undermining income, spending and confidence," he said.
"Although the government's aggressive policy response will help, it will take time," he said.
Yet some said there were modest signs of hope amid the gloom due to a small improvement from December and January.
"It was an awful report but it was not a death spiral report," said Cary Leahey, senior economist at Decision Economics, who said some had been bracing for losses of up to one million jobs.
"While things are terrible, we are tracking the 1981-82 recession very closely."
Leahey added that with tax cuts and various financial rescues taking hold, "I don't see why the economy can't bottom in the next three to six months."
Robert Brusca at FAO Economics said the report suggested the worst job losses are past: "The revisions have made the trend looking ahead much less bad.... The pattern of declines no longer points to a continuing deceleration."