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Unemployment Rate Soars to 7.2%; Bad Weather Cited

March 08, 1986|OSWALD JOHNSTON | Times Staff Writer

WASHINGTON — Severe winter weather and statistical aberrations sent the nation's overall jobless rate soaring by 0.6 percentage points to 7.2% in February, the largest one-month gain in almost six years, the Labor Department reported Friday.

But economists in and out of the Administration discounted the unexpected bad news by noting that half of the reported 400,000 decrease in jobs nationwide were in agriculture and that 200,000 jobs were lost in flood-stricken California alone.

All told, the Bureau of Labor Statistics reported, California, Texas and Illinois accounted for two-thirds of the nationwide gain in unemployment. Unusually severe winter storms on the West Coast, the collapse in oil prices in the Southwest and continued weakness in manufacturing industries in the Midwest were primarily to blame, bureau Director Janet L. Norwood told the Joint Economic Committee on Capitol Hill Friday.

During February, the civilian jobless rate in California jumped from 5.8% to 7.2%. The nationwide unemployment rate for civilians only, which excludes members of the armed forces residing in the United States, was 7.3%, up from 6.7% in January.

The concentration of unemployment in California and Texas, a state where joblessness leaped from 6.4% to 8.4%, caused an enormous jump in unemployment among Latinos, from 10.1% to 12.3%. Black unemployment increased 0.4 percentage points, but all other categories in the report--whites, men, women and teen-agers--increased about 0.6 points, the same as the national average.

Norwood said that at least 0.1 percentage point of the national jobless increase--the worst since the 1980 recession--was caused by an accounting error that understated January's unemployment by that amount. She cautioned against reading too much into the February report, despite its steep increase.

"It is clear the February data show some deterioration of the labor market, but we need data for additional months to determine what is really happening in the economy," she told the committee.

At the White House, Beryl W. Sprinkel, head of President Reagan's Council of Economic Advisers, said his phone "practically rang off the hook" with calls from worried officials. Sprinkel, citing the unusual unemployment concentration in the three states and the statistical error that made January look better than it was, concluded: "I'm quite confident that this is an aberration."

In addition, he pointed to the fact that a separate Labor Department survey of about 200,000 businesses reported a nationwide increase of 225,000 jobs, a sign of continuing growth in service industries. Private economists also cited that report, which they believe is more reliable than the Census Bureau survey of 60,000 households that is used as the source of the Labor Department's monthly unemployment report.

Economist's Opinion

But at least one private economist, Sar A. Levitan of George Washington University, cautioned that a monthly jump in unemployment of that magnitude cannot be explained completely by bad weather or statistical anomalies.

"It may be that bad weather is in the hands of God and just temporary," he said, "but the oil price drop may not be a temporary thing, and it may mean a permanent change in the economies of Texas or Oklahoma. The Administration celebrated too much over employment gains in the past two months. This jump . . . indicates there must be some very real declines in employment."

Levitan, head of George Washington's Center for Social Policy Studies and a specialist in labor economics, questioned why Illinois should have been so seriously affected in February and Michigan and Ohio, nearby Midwest industrial states, less so.

Illinois Joblessness

"The bad weather didn't stop at the Illinois border," he noted. Yet the month's census data shows that civilian unemployment in Illinois rose from 7.7% to 9.5% while Michigan's unemployment increased more slowly, by 0.4 percentage points to 8.9%. Ohio's jobless rate decreased by 0.3 percentage points to 8.7%.

Other private economists saw less cause for alarm. Irwin Kellner, chief economist at Manufacturers Hanover bank, said the unemployment rise in the household survey was mitigated by the increase of 225,000 jobs in the payroll survey. He said the report "probably overstates the amount of softness in the economy as much as the January figures overstated strength."

"The unemployment news seems to be an aberration," said Jerry Jordan, chief economist at First Interstate Bank in Los Angeles.

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