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Jobless Rate In August Hit A 5-Year High
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Now, as then, there are feedback loops whereby problems in one segment of the economy and financial system affect the others. More conservative lending by banks causes higher unemployment, and the unemployed are more likely to default on their home-equity loans, causing banks to lose money and pull back even more.
There is some good news: Prices for oil and other commodities are dropping, which should lower what people pay for gasoline and other fuels in the months ahead. However, prices for energy and food remain well above what they were a year ago and consumers will face higher heating bills as the weather turns cold.
The unemployment rate in August rose most among women, to 5.3 percent from 4.7 percent; blacks, to 10.6 percent from 9.7 percent; and Hispanics, to 8 percent from 7.4 percent. There was one possible silver lining in the weaker jobless numbers: In August, unemployment benefits were extended over a longer span, which may have made people more inclined to wait before accepting a job offer.
The weak job market is hurting even those who still have jobs, in that workers have less leverage to negotiate raises. Average weekly pay for nonmanagerial workers rose 3.3 percent in the last year, which is likely to be less than inflation.
"What is worrisome is that more full-time workers have been laid off, more people are being forced to work part time who want to work full time and more people are trying to get multiple jobs to make ends meet," said Bruce Kasman, chief economist of J.P. Morgan Chase.
The cuts by employers were spread widely. Manufacturers cut 61,000 jobs, reflecting less demand for goods. Retailers, dealing with skittish consumers and some bankruptcies, slashed 20,000 jobs. Professional and business services firms cut 53,000 jobs, heavily concentrated in cuts in temporary help. Even the nation's hotels and restaurants, which had been strong, cut back, with the leisure and hospitality sector cutting 4,000 jobs.
One surprising statistic: The construction industry, which has steadily slashed jobs this year, cut only 8,000 positions in August. It has averaged a loss of 36,000 jobs a month over the past year. But last month's modest losses may indicate that the sector, which is at the epicenter of the downturn, simply doesn't have many more jobs to lose.
