Advertisement
YOU ARE HERE: LAT HomeCollections

The Nation

October Jobless Rate Hits 5.7% Amid Mounting Payroll Cuts

November 03, 2002|LEIGH STROPE | Associated Press Writer

WASHINGTON — The nation's unemployment rate climbed to 5.7% in October as businesses slashed payrolls for a second straight month, raising new concerns about the durability of the nation's economic recovery.

Other reports Friday also showed weakness in everything from consumer spending to manufacturing. "It could be a rather blue Christmas," said David Wyss, chief economist at Standard & Poor's.

Last month's jobless rate increased from 5.6% in September, and businesses cut 5,000 jobs after shedding a revised 13,000 the previous month, the Labor Department reported. The payroll cuts broke a four-month string of job gains earlier this year that had revived economists' hopes that businesses would post "help wanted" signs once again.

"There simply are no jobs being created in this economy and until business confidence returns, it will remain a jobless recovery," said Joel Naroff, president and chief economist at Naroff Economic Advisors.

Wall Street overcame the dismal economic news, with the Dow Jones industrial average up 120 points at closing and the Nasdaq up almost 31 points.

The economy's struggles likely will be weighing on Americans' minds as they head to the polls Tuesday, particularly in high unemployment states such as Alaska, Washington and Oregon. The Northeast has been hard hit by slumps in high tech and manufacturing.

In their campaigns to win control of Congress, Democrats and Republicans are blaming each other for the economic woes and job losses.

At a Friday campaign rally in Harrisburg, Pa., President Bush described the economy as "kind of bumping along."

"Today it looks like more Americans are looking for work, and that's a problem. We need to fix it," he said.

But Democrats countered that Bush needs to spend more time focusing on the economy.

"The American people are not better off today than they were two years ago," said House Minority Leader Dick Gephardt (D-Mo.). "And instead of working in a bipartisan way to address our economic problems, this president and House Republicans are stumping across America urging people to give them total control of elected government."

Heavy job losses in manufacturing and construction and at temporary employment firms were offset somewhat by gains in mortgage banking, finance, insurance and real estate. Those gains reflect the robust home sales and high levels of refinancing being spurred by low interest rates.

The federal government also added workers for the fifth month in a row, as officials worked to strengthen airline security and continued to hire people for the Transportation Security Administration.

The economic recovery has proceeded in fits and starts because businesses have remained reluctant to make big commitments in hiring and spending during uncertainties about a possible war with Iraq, a turbulent stock market and shaken consumer confidence.

Another report Friday showed that consumer spending, which accounts for two-thirds of the country's economic activity, fell in September by the largest margin in 10 months. Sharp reductions in spending on big-ticket items such as cars led the decline, the Commerce Department said. Incomes also grew at a slower pace than analysts had expected.

"We are clearly hitting a soft spot with consumers worried about just about everything in the world from Iraq to terrorists," Wyss said. "I am not sure they are going to bounce out of this."

Activity at the nation's factories also fell in October, and construction spending increased the month before, new reports showed.

Federal Reserve policy-makers meet again Wednesday, and economists predict another rate cut in response to the dour economic picture. The Fed has kept a key interest rate at a 40-year low of 1.75% since last December.

Advertisement
Los Angeles Times Articles
|
|
|