Nation's Unemployment At 14-Year High

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The Labor Department has said the nation's unemployment rate rose to 6.5 percent in October, its highest rate in 14 years. The report said 240,000 jobs were lost, worse than expected. This year, 1.2 million jobs have been lost.

ROBERT SIEGEL, host:

From NPR News, this is All Thins Considered. I'm Robert Siegel.

MICHELE NORRIS, host:

And I'm Michele Norris. Barack Obama faces a lot of unknowns as he prepares to take office in January. But one thing is certain, an economic mess of staggering proportions awaits the president-elect.

SIEGEL: Today, Mr. Obama met with his economics advisers, who's who of business and government. And afterwards, he said, this morning's unemployment report was sobering reminder.

President-Elect BARACK OBAMA (United States of America): Tens of millions of families are struggling to figure out how to pay the bills and stay in their homes. Their stories are an urgent reminder that we are facing the greatest economic challenge of our lifetime

SIEGEL: We'll have more in a moment and what the president-elect had to say about the economy.

NORRIS: First that unemployment report from the labor department. It showed that employers cut 240,000 jobs in October. The unemployment rate hit a 14-year high of 6.5 percent. As NPR's Jim Zarroli reports, it's the latest evidence of how sharply growth has slowed.

JIM ZARROLI: Today's report depicts a slow down in the jobs market that has been both broad and dramatic. There were job cuts in nearly every sector of the economy, including manufacturing, construction, and business services. Richie Yamarone is chief economist at Argus Research.

Mr. RICHIE YAMARONE (Chief Economist, Argus Research): In essence there was nothing encouraging in this report. It paints a picture of a very disheartening jobs climate and from what I'm seeing in the tea leaves right, now. There's very little to expect, that's there's anything better down the road.

ZARROLI: Yameron says the losses were unexpectedly steep in the retail industry, from car dealers to clothing stores. Retailers have been slashing jobs.

Mr. YAMARONE: Consumers are not going out and spending, so you don't need to employ people to stand around and fold shirts if there's no one coming in to the store to buy them.

ZARROLI: Not only were October's job losses steeper than expected, but the losses for August and September were worst than the government first estimated. All told the economy has loss 1.2 million jobs this year. And the losses have really accelerated since the down turn in the stock market got underway almost two months ago.

Mr. YAMARONE: But the disheartening thing about this whole situation is that it happened so quickly. It seems as if, someone flicked the off switch on the US economy on September 15th.

ZARROLI: The slow down in the jobs market ratchets up the pressure on President-elect Obama to find away to turn the economy around. And today's Labor Department report was the first thing he mentioned in his very first news conference since his election. But the swiftness of the payroll decline this fall, suggests that he has his worked cut out for him.

Mr. YAMARONE: What we had is an economy that's in trouble and there's no easy way out, there's no quick way out. There's no painless way out.

ZARROLI: Ken Goldstein is an economist at the conference board. He says the tight credit markets have forced businesses to cut back on capital spending and hire fewer people. And with jobs growing more scarce, consumers have less money to spend.

Mr. KEN GOLDSTEIN (Economist): This is just too bigger problem to expect anything the government does or anything that any individual business does, to really, you know, turn this around in the next three to six months. That's just asking for too much.

ZARROLI: Goldstein says the only positive sign for the US economy right now is that oil prices have fallen, which will give people a bit more breathing room to pay bills. But with the weak job market he said, it will take a lot more than that to get consumers spending again and to really meet the economic challenges ahead. Jim Zarroli, NPR News, New York.

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U.S. Jobless Rate Rises To 14-Year High 6.5 Percent

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Unemployment graphic

Just about everyone was expecting a gloomy unemployment report from the Labor Department on Friday morning. Economists had expected a loss of 200,000 jobs in October because of the financial crisis.

As it turns out, the news was even worse than that: The nation's unemployment rate rocketed to a 14-year high of 6.5 percent, and employers cut some 240,000 jobs in October. To put that in perspective, 1.2 million jobs have vanished so far this year.

The latest surge in joblessness is just one more indication — amid a sea of other bleak economic reports — that the economy took a precipitous dive last month and is likely already in recession. The unemployment rate has now surpassed the high seen after the last recession in 2001. In June 2003, the jobless rate peaked at 6.3 percent.

Barack Obama's administration will come into office in January having to deal with what looks like the U.S. economy's steepest decline in decades. October marked the 10th straight month of payroll reductions.

The president-elect is expected to address the jobless report later Friday, after meeting with economic advisers on his transition team. The group includes such luminaries as billionaire Warren Buffet and former Federal Reserve Chairman Paul Volker.

In the meantime, investors seemed to have anticipated the bad news and took it in stride. The Dow Jones Industrial average closed up 248 points to 8,943, recovering somewhat from two days of steep losses.

The total number of jobless Americans last month jumped to 10.1 million, the highest level in 25 years, according to Labor Department figures. After the report, a host of analysts started downgrading their projections for the economy. Goldman Sachs, for example, sees the unemployment rate hitting 8.5 percent by the end of 2009.

Digging deeper into the numbers, the Labor Department report showed that the job losses were across the board. Factory payrolls fell 90,000 last month — the biggest drop since July 2003 — after falling 56,000 in September. Part of that decline can be accounted for by a recently ended strike by 27,000 machinists at Boeing, the department said. Builders were hit, too. The housing slump had them shedding 49,000 jobs last month. Financial companies cut 24,000 jobs, after firing 16,000 last month.

Service industries — from restaurants to retailers — cut 108,000 workers in October. The September number was almost twice that — 201,000. Job losses in August and September turned out to be deeper than originally reported as well. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.

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