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U.S. unemployment jumps
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December 7, 2001: 11:20 a.m. ET
Employers cut 331,000 jobs in November; jobless rate rises to 5.7%.
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NEW YORK (CNN/Money) - The U.S. unemployment rate jumped to 5.7 percent in November - the highest in six years - as employers cut hundreds of thousands more jobs in response to the first recession in a decade in the world's largest economy.
The Labor Department said employers cut 331,000 jobs from non-farm payrolls last month after a revised loss of 468,000 jobs in October. The unemployment rate rose from 5.4 percent. Economists surveyed by Briefing.com had forecast unemployment at 5.6 percent and job cuts of 201,000.
The combined October-November job cuts are the most since May-June of 1980, and the unemployment rate is at its highest level since August 1995.
"The fact that unemployment is getting worse is not a surprise," said Anthony Chan, chief economist at Banc One Investment Advisors. "But the fact that it's deteriorating at this pace is a surprise."
President Bush and his Labor Secretary, Elaine Chao, separately expressed alarm at the data and called for Congress to approve a package of economic stimulus.
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CNNfn's Tim O'Brien reports from Washington on the unemployment numbers.
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"Today's numbers are not good news, and I think it's a clear reflection that the attacks of Sept. 11 are still reverberating around our economy," Chao told CNNfn's Market Call program. "I think it's really important that the U.S. Senate begin to act on the president's economic security package."
Bush and Chao support the bill passed by the House of Representatives, which gave generous tax breaks to corporations in hopes of spurring business spending. Democrats in control of the Senate would prefer to give relief directly to unemployed workers to encourage consumer spending.
On Wall Street, stocks fell along with bond prices.
Separately, the University of Michigan's consumer sentiment index rose to 85.8 in the initial reading for December from a final November reading of 83.9, according to a Reuters report. Though the jump was better than expected - economists surveyed by Briefing.com expected the index to rise only to 84.5 - it was largely ignored by the markets.
"It was a little stronger than expected, but the sentiment data really hasn't been a major issue here," John Canavan, market analyst at Stone & McCarthy Associates, told Reuters. "We're really still reacting to the payroll data."
November marked the second straight month of big job losses as the economy continued to stagger from the blow delivered by the Sept. 11 terrorist attacks. The government said that since March, which is when a panel of economists said the nation's first recession in a decade began, 1.2 million Americans have lost their jobs.
To keep consumers spending despite mounting unemployment, the Federal Reserve has cut its target for short-term interest rates 10 times this year and is expected to do so again after its policy makers meet Tuesday.
"Despite some better-than-expected data over the past two weeks, this report is sufficiently gloomy to force the Fed to ease next Tuesday and retain their bias toward further economic weakness," said Steven Wood, economist with FinancialOxygen.
Click here for CNNmoney.com's economic calendar
The U.S. economy sank into recession despite the Fed's efforts, according to economists at the National Bureau of Economic Research, who recently said the downturn began in March.
A recession is commonly defined as two straight quarters of shrinking gross domestic product (GDP), and while that hasn't happened yet, third-quarter GDP shrank at a 1.1 percent rate, and many economists say fourth-quarter GDP could be worse.
Most analysts expect a recovery sometime next year, but unemployment is a lagging indicator and will likely continue to rise even after growth has returned to the economy.
Additionally, this recession is unlike prior downturns, in that it was severely worsened by one big event - the Sept. 11 attacks. After that date, a slowdown that had been largely confined to business spending and manufacturing spread through the entire economy.
"We saw the unemployment rate actually holding throughout most of this slowdown, and only about four months ago we were at a 4.5 percent unemployment rate," Brown Brothers Harriman economist Lara Rhame told CNNfn's Before Hours program. "The average recession sees a lot of job losses, so we've got a lot of catching up to do."
As it has for more than year, manufacturing took the brunt of the job losses, shedding 163,000 workers, the department said in its report. But the service sector, which had been strong before the attacks but has been suffering since Sept. 11, cut 70,000 jobs.
The number of unemployed - those people out of work but looking for work - rose to 8.2 million in November from 7.7 million in October.
People with jobs are seeing their wages rise, at least. Average hourly earnings rose 5 cents in November to $14.52, a 0.3 percent increase.
One other cold comfort is that the unemployment rate is still far below where it was in previous recessions - it peaked at 9.0 percent in 1975, 10.8 percent in 1982 and 7.8 percent in 1992.
"This is simply what a recession is like," Bill Cheney, chief economist at John Hancock Financial Services, said in a research note. "This report represents real people and real pain, especially around the holidays," he added, noting the United States has had just two recessions in the past 20 years. 
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