August Unemployment At Five-Year High
MELISSA BLOCK, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
MICHELE NORRIS, Host:
And I'm Michele Norris. This time last month, we told you the nation's unemployment rate had hit a four-year high. Now with the August numbers, it has leapt to a five-year high: 6.1 percent.
For the eighth month in a row, businesses cut payrolls. In August, 84,000 jobs were eliminated. Analysts say today's report from the Labor Department suggests more tough times to come for the U.S. economy, as NPR's Frank Langfitt reports.
FRANK LANGFITT: The American economy is filled with gloomy figures these days. One relatively hopeful sign has been the unemployment rate, until today.
In recent months, unemployment has been in the five percent range, but in August it jumped to 6.1 percent. Robert Dye is a senior economist with PNC Financial Services in Pittsburgh. He says going over the six percent threshold is worrisome.
ROBERT DYE: It's just another crossing a psychological barrier, because a five percent unemployment rate, we sort of associate that with, you know, near full employment in the U.S.
LANGFITT: Dye says over six percent signals a more rapidly deteriorating job market.
DYE: And it's going to go up from here. I would not be at all surprised, you know, to see a 6.2, 6.3, 6.4 percent.
LANGFITT: The unemployment rate isn't the only bad sign in today's report. Another is the nature of job losses. Not so long ago, layoffs were concentrated in a few weak sectors: manufacturing, construction, and later mortgage lending.
NANCY KIMMELMAN: But what we're seeing in the employment data now is that it's- those job losses are happening in virtually every sector.
LANGFITT: That's Nancy Kimmelman. She's an economist and author of "Common Sense: How the Economy Really Works." She says the troubles that began with the housing crisis are now spreading across the job market.
Take leisure and hospitality. After steady growth, it's lost 20,000 jobs since April. Kimmelman and others blame oil prices and economic anxiety.
KIMMELMAN: Americans aren't going anywhere. This summer was a staycation summer. People stayed close to home. They didn't want to pile up into the car and drive across country because they couldn't afford the gasoline for it.
LANGFITT: Kimmelman says economic trouble can spread like a virus, and that's what's happening now.
KIMMELMAN: The construction worker in Indiana coughs, loses his job. Then an individual in Miami Beach or Los Angeles might catch a cold. If that construction worker doesn't take a trip to California, then it causes a retrenchment in the L.A. economy. Then what seemed like a one-off issue spreads throughout the economy, and the weakness is indeed contagious.
LANGFITT: Over the past year, one thing that has helped keep the economy from becoming even worse is exports. A weak dollar has made U.S. products more attractive to other, faster-growing countries.
Steve Heat(ph) works for Vermeer, which makes construction and farm equipment in Pella, Iowa. He says overseas sales have bolstered his company as the U.S. market has slowed. He spoke by cell phone while traveling in Brazil.
STEVE HEAT: In the last three to four years, we've seen significant growth in Asia, in Eastern Europe, and in the Middle East as well.
LANGFITT: And that means exports now support about 700 jobs back home in Iowa. But some companies may have trouble relying on export growth in the future. The U.S. dollar has strengthened recently, and the world economy shows signs of slowing. Nancy Kimmelman expects these trends to continue. As for the U.S. economy, she doesn't think it will rebound until sometime next year.
Frank Langfitt, NPR News, Washington.