U.S. Jobless Rate Soars
The U.S. job market suffered its heaviest blow in more than two decades in October, shedding a staggering 415,000 jobs as the full impact of the devastating Sept. 11 attacks struck an economy already in the early stages of recession, a government report on Friday showed.
The Labor Department said the national unemployment rate soared half a percentage point to 5.4 percent last month from 4.9 percent in September -- the highest in nearly five years since a matching 5.4 percent rate in December 1996.
"It's not good news for America," President Bush said, urging the Senate to quickly pass an economic revival package. After meeting with economic advisers, Mr. Bush said the Sept. 11 terrorist attacks had not only taken thousands of lives but had also "threatened the livelihoods of thousands of American workers."
October's job losses were the sharpest for any month since May 1980, when 464,000 were dropped from payrolls, and came on top of a revised 213,000-job decrease in September -- even worse than the initially reported 199,000 job loss.
Last month's performance was far worse than the 289,000 jobs that Wall Street analysts had forecast would be lost and the unemployment rate was well above their 5.2 percent estimate.
"Companies are in survival mode and they are cutting jobs to control costs," said economist Ken Mayland of ClearView Economics. "The tragic events of Sept. 11 and their aftermath probably tipped the economy into recession. People are waiting for the other shoe to drop."
And, reports CBS News Business Correspondent Anthony Mason, that's just what economists are worried about — mounting layoffs will deal a blow to consumer confidence, consumer spending, and the economy.
"You're gloomy about anthrax. That's not a reason not to buy something. But if you're worried about your job, that is a reason," said John Hancock's Bill Cheney.
The employment report capped a week of bleak economic news:
- Consumer spending fell at its fastest pace in more than 14 years in September as shell-shocked Americans shut their wallets in the wake of the Sept. 11 terror attacks.
- The manufacturing sector sank deeper into recession in October as the terror attacks choked off a bid by the nation's factories to claw out of a 15-month slump, an industry report showed.
- United Airlines and Delta Air Lines, the nation's second- and third-largest carriers, respectively, reported massive third-quarter losses, although large cash infusions from the federal government helped them beat Wall Street's extremely low earnings expectations.
- Consumer confidence plummeted in October to its lowest level in more than seven years, as the terrorist attacks sapped Americans' optimism about job security and the economy.
- The government reported that the economy shrank 0.4 percent in the third quarter, the biggest drop since the last recession in 1991, and a signal that the country may be heading toward a full-blon downturn.
To revive the economy, the Federal Reserve has cut interest rates nine times this year, with two reductions coming after the Sept. 11 attacks. Most economists predict another rate cut at the Fed's next meeting on Nov. 6.
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For the third month in a row, total payrolls declined. The loss of 415,000 jobs in October had been preceded by cuts of 213,000 in September and 54,000 in August.
Total employment — private companies and government — has fallen by nearly 900,000 since March. Over the same period, employment in the private sector alone dropped by an even bigger 1.2 million.
"The data is weak everywhere one looks, even in sectors that one would have expected to hold up, one being construction," said economist Alan Ruskin of 4CAST Ltd. in New York. "We are seeing extreme weakness in the service-producing sector, suggesting a marked broadening of the slowdown."
The carnage represents the toll of the more than yearlong economic slump the country has been suffering through as well as the attacks on the World Trade Center and the Pentagon.
Those attacks temporarily shut down the airlines and the stock market and disrupted business nationwide, resulting in billions of dollars of losses.
Manufacturing has been hardest hit by the economic slump and has been enduring a recession of its own for months. The sector continued to post heavy job losses. In October, another 142,000 jobs were cut, bringing totl job losses since March to more than 800,000.
To cope with sagging sales, manufacturers have sharply cut back production and shed workers.
In the airline industry, employment fell by 42,000 and in the travel sector 11,000 jobs were cut in October. The government said these job losses reflected fallout from the attacks.
In the service sector, normally the engine of job growth in the country, employment dropped by 111,000 in October, the fourth and largest decline this year for the industry. Particularly large job losses occurred at hotels and temporary help firms.
Retailers lost 81,000 jobs in October, the second large job loss in a row. Retailers, including clothing, toy and gift shops, that normally hire in October for the holiday season failed to add jobs at their normal pace, the government said.
Construction companies cut 30,000 jobs in October as builders showed more caution in the wake of the attacks.
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