WASHINGTON – The government’s report Friday of an 8.1 percent unemployment rate equals the jobless number that the Obama administration has projected for the entire year. Few economists think that optimistic projection will hold, and many think that more big job losses are likely, with grim implications for the housing and banking crises.
Employers shed another 651,000 jobs in February, the Labor Department said Friday, pushing the nation’s unemployment rate up from 7.6 percent to 8.1 percent. That’s the highest jobless rate in a quarter-century and a clear sign that the deep U.S. economic recession isn’t abating.
The monthly Employment Situation Summary also revised the jobs numbers for December and January downward, for a combined 161,000 more lost jobs than had been reported earlier. This pointed to a steeper economic contraction early this year than all but the gloomiest forecasters had projected.
Underscoring the rapid pace of decline, the department’s Bureau of Labor Statistics reported that payroll employment has fallen by 2.6 million people in the past four months alone. Over the past 12 months, the number of unemployed has increased by about 5 million. Some 12.5 million Americans are now jobless.
“This is what falling off a cliff looks like,” said Larry Mishel, the president of the liberal Economic Policy Institute. Mishel looked at trends in the first 14 months of past recessions and concluded that “we’ve seen the sharpest decline in employment and the sharpest decline in private sector hours worked – a 5.5 percent decline – than in any recession in 50 years.”
Tables attached to the jobs report included some lesser-known indicators that point to even greater trouble ahead, especially in the sagging housing sector. One is a near-doubling of the unemployment rate of college-educated workers over the past 12 months to 4.1 percent from 2.1 percent. For workers with some college or associate degrees, the jobless rate has grown from 3.8 percent to 7 percent in the same period.
There now are more than 4.5 million unemployed in these two categories, more than a third of all jobless workers.
That means that consumer spending, the engine that powers most of the U.S. economy, is likely to sputter even more. Workers with the highest incomes tend to have the best credit scores and access to the best mortgage rates, and now the top customers for credit card companies and mortgage lenders are joining the ranks of those who are falling behind on mortgage payments and losing their homes.
The increasing number of white-collar workers who are losing their jobs threatens to produce a new wave of foreclosures on top of the steep numbers of foreclosures on subprime mortgages, which were given to the weakest borrowers. It suggests that a housing recovery will depend on a jobs recovery.
“A 4 percent rate might look pretty low, but it’s doubled in slightly more” than a year, said Jay Brinkmann, the chief economist for the Mortgage Bankers Association. “It is very difficult to deal with the mortgage issue separately, without realizing so much of it now is going to be driven by job losses.”
President Barack Obama took note of Friday’s jobs numbers during a graduation ceremony at a police academy in Columbus, Ohio. He said his multifaceted economic rescue plan aimed to reverse the steep job losses, but he pleaded for Americans to give his $787 billion economic stimulus plan and his housing plan time to work.