Jobless Rate Hits 8.5 Percent
Despite some recent hopeful signs that the economic crisis is beginning to wane, the U.S. job market continues to get battered.
The nation's unemployment rate jumped to 8.5 percent in March, the highest since late 1983, as a wide range of employers eliminated a net total of 663,000 jobs.
The Labor Department's report is fresh evidence of the toll the recession has inflicted on America's workers and companies. Most economists expect the job cuts will continue for much of this year.
The latest tally of job losses, released Friday, was slightly higher than the 654,000 that economists expected. The rise in the unemployment rate matched expectations.
The dismal jobs report followed President Barack Obama all the way to Europe, where he wrapped up the G20 summit and is currently meeting NATO leaders, reports CBS News White House correspondent Peter Maer. The numbers are a stark reminder of the deep economic crisis and the need for international cooperation
"If we do not have concerted action then we will have collective failure," Mr. Obama said in Strasbourg, France.
Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.
The number of unemployed people climbed to 13.2 million in March. In addition, the number of people forced to work part time for "economic reasons" rose by 423,000 to 9 million. That's people who would like to work full time but whose hours were cut back or were unable to find full-time work.
If part-time and discouraged workers are factored in, the unemployment rate would have been 15.6 percent in March, the highest on records dating to 1994.
Looking forward, economists expect monthly job losses continuing for most - if not all of - this year.
However, they are hoping that payroll reductions in the current quarter won't be as deep as the roughly 685,000 average monthly job losses in the January-March period.
In the best-case scenario, employment losses in the present quarter would be about half that pace, some economists said. That scenario partly assumes the economy won't be shrinking nearly as much in the present quarter.
The deterioration in the jobs market comes despite a few hopeful signs recently that the recession - now the longest since World War II - could be easing.
Wall Street has rallied in recent weeks, with the Dow Jones industrials increasing 20 percent in the last 4 weeks - the largest gain in 76 years. This is not necessarily contradictory, as improvements in unemployment rates typically lag behind other economic indicators, reports CBS News correspondent Jeff Glor.
But some economists warn that some relief in unemployment data will be necessary to sustain Wall Street's positive vibes.
"There are some green shoots in the economy," Mark Zandi, chief economist for Moody's Economy told CBS News, "but if we continue to lose 700,000 jobs per month, these green shoots are just going to burn out."
Stocks fluctuated in quite trading Friday after the reports release.
Seven states currently have double digit unemployment rates and the national rate could be headed that way, reports Glor.
"I think the unemployment rate will peak at just around 10 percent probably in the spring, maybe early summer of 2010," Zandi told CBS News.
As the economic downturn eats into their sales and profits, companies are laying off workers and resorting to other cost-saving measures. Those include holding down hours, and freezing or cutting pay, to survive the storm.
Job losses were widespread last month. Construction companies cut 126,000 jobs. Factories axed 161,000. Retailers got rid of nearly 50,000. Professional and business services eliminated 133,000. Leisure and hospitality reduced employment by 40,000. Even the government cut jobs - 5,000 of them.
Education and health care were the few industries showing any job gains.
Federal Reserve Chairman Ben Bernanke said the recession could end later this year, setting the stage for a recovery next year, if the government is successful in bolstering the banking system. Banks have been clobbered by the worst housing, credit and financial crises to hit the country since the 1930s.
Even if the recession ends this year, the economy will remain frail, analysts said. Companies will have little appetite to ramp up hiring until they feel the economy is truly out of the woods and any recovery has staying power.
Economists say the job market may not get back to normal - meaning a 5 percent unemployment rate - until 2013.
"There's going to quite a long haul before you see the jobless rate head down," said Bill Cheney, chief economist at John Hancock Financial Services.
To brace the economy, the Fed has slashed a key bank lending rate to an all-time low and has embarked on a series of radical programs to inject billions of dollars into the financial system.
And the Obama administration had launched a multi-pronged strategy to turn the economy around. Its $787 billion stimulus package includes money that will flow to states for public works projects, help them defray budget cuts, extend unemployment benefits and boost food stamp benefits.
The administration also is counting on programs to prop up financial companies and reduce home foreclosures to help turn the economy around.
On the economic front, some glimmers of hope have emerged recently.
Orders placed with U.S. factories actually rose in February, ending a six straight months of declines, the government reported Thursday. Earlier in the week, there was better-than-expected reports on construction spending and pending home sales. And last week a report showed that consumer spending - an engine of the economy - rose in February for the second month in a row - after a half-year of declines.
Still, skittish employers announced more job layoffs this week.
3M Co., the maker of Scotch tape, Post-It Notes and other products, said it's cutting another 1,200 jobs, or 1.5 percent of its work force, because of the global economic slump. Fewer than half the jobs will be in the U.S., but include hundreds in its home state of Minnesota. The 1,200 figure includes cuts made earlier in the first quarter.
Elsewhere, healthcare products distributor Cardinal Health Inc. said it would eliminate 1,300 positions, or about 3 percent of its work force, and semiconductor equipment maker KLA-Tencor Corp. said it will cut about 600 jobs, or 10 percent of its employees.