Unemployment Makes Dramatic Leap

Jump To 5.5 Percent In May Is Largest Increase Since 1986; 8.5M Americans Out Of Work

(CBS/ AP)  The nation's unemployment rate jumped to 5.5 percent in May - the biggest monthly rise since 1986 - as nervous employers cut 49,000 jobs.

The latest snapshot of business conditions showed a deeply troubled economy, with dwindling job opportunities in a time of continuing hardship in the housing, credit and financial sectors.

With employers worried about a sharp slowdown and their own prospects, they clamped down on hiring in May, said Friday's report from the Labor Department. The unemployment rate soared from 5 percent in April to 5.5 percent in May. That was the biggest one-month jump in the rate since February 1986. The increase left the jobless rate at its highest since October 2004.

The White House quickly responded to the unemployment numbers by saying it was “not the report we wanted to see.”

But spokesman Scott Stanzel told CBS News White House Correspondent Mark Knoller that even an unemployment rate at 5.5% - which he says is “too high” - is lower than the average in the 1970s, 80s and 90s. The spokesman also said White House analysis shows the increase is mostly attributed to new job seekers and not a broad increase in layoffs.

The big jump in the unemployment rate surprised economists who were forecasting a tick-up to 5.1 percent. Payroll losses, however, weren't as deep as the 60,000 that analysts were bracing for. Still, job losses in both March and April turned out to be larger than the government previously reported. Employers now have cut payrolls for five straight months.

The 5.5 percent rate is relatively moderate judged by historical standards. Yet, there was no question that employers last month sharply cut jobs in manufacturing, construction, retailing and professional and businesses services. Those losses swamped gains elsewhere, including in the education and health fields, government and leisure and hospitality.

The government said the number of unemployed people grew by 861,000 in May - rising to 8.5 million. The over-the-month jump in unemployment reflected more workers losing their jobs as well as an increase in those coming into the job market to look for work, the Bureau of Labor Statistics said.

A year ago, the number of unemployed stood at 6.9 million and the jobless rate was 4.5 percent.

The startling news followed Thursday's Labor Department report that showed applications for unemployment benefits totaled 357,000 last week, some 18,000 fewer than the previous week. That pushed applications for benefits to their lowest level since mid-April.

However, the four-week average for people receiving benefits edged up to 3.086 million, the highest level since March 6, 2004, when the country was still struggling to recover from a prolonged period of rising unemployment.

A trio of crises - housing, credit and financial - have rocked the economy. That's caused economic growth to slow to a crawl as businesses and consumers have tightened their belts. Spiraling energy costs are another negative force.

The country's economic problems are a top concern for voters - and thus for President Bush, lawmakers on Capitol Hill and those vying to win the White House this fall.

So far this year, the government said, job losses have totaled 324,000.

Workers with jobs, however, saw modest gains.

Average hourly earnings for jobholders rose to $17.94 in May, up 0.3 percent from the previous month. Economists were forecasting a 0.2 percent gain. Over the last 12 months, wages have grown by 3.5 percent.

With food and energy prices marching upward, paychecks aren't stretching as far. Although tax rebates helped to energize shoppers and give major retailers better sales in May, analysts still believe that anxious consumers will be keeping a close watch on their purchases and their budgets in the months ahead.

Worried about inflation, Federal Reserve Chairman Ben Bernanke has signaled that the central bank's rate-cutting campaign, which commenced last September to help bolster the economy, is probably over for now.

Fed officials and the Bush administration are hoping that the Fed's powerful doses of rate reductions and the government's $168 billion stimulus package, including tax rebates for people and tax breaks for businesses, will pull the economy out of its deep funk in the second half of this year.

Even if that happens, the unemployment rate is expected to climb to 6 percent or higher early next year. Employers won't want to ramp up hiring until they feel more sure that an economic recovery has strong legs.

This prolonged stretch of job cuts has many economists believing the country has fallen into a recession.

However, the overall economy as measured by the gross domestic product has managed to remain in positive territory with the GDP growing at an annual rate of 0.9 percent in the first three months of the year.

[cayrick]

Learn how to vote intelligently Amerika.

[patriot12436]

realitytoday
The GOP is a joke. But they used the system to screw us the working class. They didn''t screw the system it works fine for them. I got a letter from a senator in Nevada yesterday telling me how well the economy is doing and what a great job bush has done leading the country. I told him i would not be voting for him in November and stop trying to blow smoke up my a-s-s.

[patriot12436]

stratmaster2
Your analogy could also very well apply to obama. I do not expect to see him finish a term in office either.

[patriot12436]

boris007
You are right , we would have been better off with gore. He just stood there and did nothing. That would be much bette than what bush has done.

[patriot12436]

realitytoday
You have to re3member these figures are put out by bish''s people they couldn''t lie more than that and get away with it so the truth as usual is outof the question.

[patriot12436]

donbl1
I would agree but this is not a recession, it is a full blown depression. Our govt is about to collapse economically. I don''t know we can survive until bush leaves office.

[patriot12436]

Yes our govt hides th facts with numbers. If your not drawing unemployment then you are not a part of the percentage. Like Vietnam, if you were wouinded and sent to Japan for treatment and died there, you wer not in the war zone so you didn''t count as a war casualty, they didn''t count those who died of accident, sickness snakebite, etc.

[patriot12436]

If they can''t keep the ignorant believing then they know they have lost.

[patriot12436]

They said it is not the figures they wanted to see but are still lower than the 70''s and 80''s. Of course they are lower we have a biggrr population today. The govt is trying to blow smoke at us as usual., and we are not swallowing it. They say the economy is going good and bush is doing a good job. I say it is time to save your wristwatches because is too late for your boots, the *** is getting deeper by the minute.

[justsane-2009]

smart enough to recognize that you can''t spell...i think that makes me too smart to be a republican-- and you my dear, are the whiny one. :)

[justsane-2009]

"The unemployment rate soared from 5 percent in April to 5.5 percent in May. That was the biggest one-month jump in the rate since February 1986."

and who was president then? oh yes, the famous ronald reagan. the republicans do such a fine fine job with the economy. i have never been able to figure out how anyone who is a member of the working class could vote for these guys...personally, i''m not rich enough to be a republican.

[stn_sage]

Unemployment up to 5.5%?! NOPE. It''s a LOT higher than that! Because people are not counted as unemployed after they''ve been out of work for ''x'' amount of time, or run out of benefits, or give up looking!

With all the layoffs in the auto, retail, housing, and financial sectors, a "true" count would show it''s probably closer to 15% at least!

In most European countries you''re considered unemployed until you find another job, whether it''s 10 days or 10 years! Their rates reflect it, ours don''t!

RE: We can thank George W. for ruining our country just as surely as he ran his businesses into the ground Posted by RandyNason at 07:42 PM : 6/06/08
-------ABSOLUTELY!

RE: Still surprising to see BUSH with a 23% approval he should 0% by RealityToday at 07:32 PM : 6/06/08
-------ABSOLUTELY!

[ubrew12]

SharnCedar said: "Since clearly the Democrappic Congress has backed Bush on ever bad move he has made"

for the last 1.5 years.

If you want to rewrite history, try not to choose history the rest of us have lived through.

[sharncedar]

"Is it *all* Bush''''s fault?"

Good question. Since clearly the Democrappic Congress has backed Bush on ever bad move he has made. So is it all his fault? They backed the "stimulus" which has now backfired into even worse conditions (more debt and more fear) and they have been up his anuus all the way, ******** for him. He is the right leader to represent the worst American government in history. But that worst American government in history contained many little terds, including Obama-liar and Hillary-warmonger and all the rest. We need to flush the toilet. They all need to go ...

[powersmaker]

The White House quickly responded to the unemployment numbers by saying it was %u201Cnot the report we wanted to see.%u201D

- This is the best our fearless leader has to offer? Mccain should throw in the towel now ...

[mcv57]

The Bushwacker''''s economic plan is nothing more than Reaganomics (Nazis Economics). Build-up the military industrial complex on debt. The only difference here is that Hitler siezed other countries to pay the debt; the Bushwacker and the Republican Party is using your future generation of liability.

Posted by mcv57

[mcv57]

They tend to happen in election years or shortly thereafter because of the political rhetoric scaring voters.

Posted by donbl1

Are you trying to make us feel better with your ignorance?

[donbl1]

Recessions happen every 6 to 9 years regardless of who is in charge of the government.

They tend to happen in election years or shortly thereafter because of the political rhetoric scaring voters.

[rafterman1]

Is it *all* Bush''s fault? No, but a lot of it is. E.g., gas price increases can be tied directly with the launching of the ill-advised Iraq war. Other Bush policies have lead to a lack of confidence overseas in our dollar and our economy. The right can spin it all they want or blame Clinton eight years out of office, but Bush will go down with guys like Herbert Hoover as one of our worst. Even his own party doesn''t want anything to do with him any more. McCain will win by *not* tying himself to Bush, which says alot about how the last eight years went.

[randynason]

Record job losses, spiking gas prices, inflationary food prices, home foreclosures up the kazoo...
We can thank George W. for ruining our country just as surely as he ran his businesses into the ground. The as*hole is a f-ing idiot not worthy of picking up dog sh*t in the park, frankly.