Unemployment hits 25-year high
Jobless rate hits 8.1% in February as a record-high 12.5 million people are unemployed.
NEW YORK (CNNMoney.com) -- The U.S. economy continued to hemorrhage jobs in February, bringing total job losses over the last six months to more than 3.3 million, and taking the unemployment rate to its highest level in 25 years.
The government reported Friday that employers slashed 651,000 jobs in February, down from a revised loss of 655,000 jobs in January. December's loss was also revised higher to a loss of 681,000 jobs, a 59-year high for losses in one month.
Economists surveyed by Briefing.com had forecast a loss of 650,000 jobs in February.
"The economy is headed south with a vengeance," said Kurt Karl, head of economic research for the U.S. unit of insurer Swiss Re.
The unemployment rate rose to 8.1% from 7.6% in January. It was the highest reading since December 1983 and higher than economists' projections of 7.9%.
Most workers who have jobs today are not old enough to have worked in a labor market this bad, while 13% of workers weren't even alive the last time unemployment was at this level.
The survey of households found 12.5 million people are now unemployed, the most since records started being kept in 1940.
The U.S. economy has now lost 4.4 million jobs since the start of 2008. To put that in perspective, that's about equal to the total number of jobs in each of the following states -- Georgia, Michigan and North Carolina -- at the end of 2007.
"It's a dismal report. We thought we'd have another month like this, and I think we have a couple of more coming," said Tig Gilliam, chief executive of Adecco Group North America, a unit of the world's largest employment firm. "We've got a lot of layoffs being announced that haven't been implemented."
Gilliam said he expects the unemployment rate to rise to 9% within the next few months.
Other economists echoed Gilliam's view that the battered labor market has yet to hit bottom. John Silvia, chief economist at Wachovia, pointed to the weekly initial jobless claims, which are still above 600,000 a week, and the large increase in the number of people working part time when they'd prefer full-time work as signs of more job losses to come.
"I'd love to believe this is the worst, but I suspect we'll continue to lose jobs for months to come," he said. "All we can hope is that the pace would slow down."
The Obama administration issued a statement saying that the jobs report and overall economic problems are the reasons why it moved quickly to get an economic stimulus package passed by Congress last month.
"There's no doubt that we have a long way to go to get this economy moving again, and the jobs numbers are one more reminder of that," White House Press Secretary Robert Gibbs told reporters aboard Air Force One.
But some economists questioned whether the stimulus package will be able to do much to address job losses in the near term.
"The stimulus won't have immediate effect on job creation even though some planned layoffs could be cancelled," said Sung Won Sohn, economics professor at Cal State University Channel Islands. He said most of the job growth that the $787 billion in government spending will create won't be seen until 2010.
The number of workers with part-time jobs who either can't find full-time positions or have had their hours cut jumped by 787,000 in February to 8.6 million.
Counting those part-time workers, along with discouraged job seekers no longer counted as unemployed by the government, the so-called underemployment rate hit 14.8% in February, up from 13.9% in January. This was the fifth straight record high for that reading, which has been calculated since 1994.
Silvia said the cut in total hours worked and the jump in those now working only part-time are both signs that the overall economy will continue to slow.
He said many people with part-time jobs are not earning enough to pay their bills. That will probably lead to more cuts in consumer spending, which in turn will lead to more drops in revenue for businesses and more layoffs.
The job losses were widespread, with manufacturing and construction companies, as well as business and professional services firms all losing more than 100,000 workers.
The report also showed that businesses in more three-quarters of the sectors in the economy reduced the number of jobs in the last month. Over the last three months, 83.2% percent of industries have lost workers, a record high for that reading.
"What started in construction and manufacturing and financial services has spread to every industry," said Gilliam.
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