Unemployment rate at 5-year high listen09/05/08 Mitch E. Perry
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The unemployment rate jumped to 6.1 percent in August, its highest level in five years.
Employers cut 84,000 jobs last month, more than economists had expected, and the Labor Department said that more jobs were lost in June and July than previously thought.
Jared Bernstein is a senior economist at the Economic Policy Institute and an economic advisor to Barack Obama. Bernstein said the engine of job growth hasnâ€™t just stalled, but gone in reverse.
Robert Dye, a senior economist with PNC Financial Services Group, says the jobs report has troubling implications for consumer spending, which accounts for 70 percent of the overall economy.
Unemployments among blacks rose to 10.6 percent.
William Poole, the former president of the Federal Reserve Bank of St. Louis, said the news increases the probability that the U.S. is really in a recession. If so, it would mean George W. Bush would become first the president since Richard Nixon to oversee two recessions.
Last week, the Gross Domestic Product (GDP) was revised upward by the Commerce Department to 3.3 percent, a much healthier number than the original 1.9 percent figure.
But Obama economic advisor Jason Ferman says most economists believe the federal governmentâ€™s economic stimulus package has worked its way through the system, and the GDP will probably not continue at that rate. He says itâ€™s time for another stimulus package.
Bloomberg Media reports that today's figures indicate the labor market is deteriorating faster than U.S. central bankers expected. Among fed governors and district bank presidents, none projected an unemployment rate above 6 percent for the average in the fourth quarter.
Rising unemployment may make it harder for Americans to keep paying their mortgages. The Mortgage Bankers Association said in a report today that foreclosures accelerated to the fastest pace in almost three decades during the second quarter. The total inventory of homes in foreclosure reached 2.75 percent, almost tripling since the five-year housing boom ended in 2005.