Jobless rate at 7.6 percent

By: STAFF AND WIRE REPORTS | Times-Dispatch
Published: February 07, 2009

Recession-battered employers eliminated 598,000 jobs in January, the most since the end of 1974, catapulting the unemployment rate to 7.6 percent.

The Labor Department report, released yesterday, puts even more pressure on Congress and President Barack Obama's administration to revive the economy through a stimulus package and a revamped financial bailout plan.

Obama decried as "inexcusable and irresponsible" the delay of his economic recovery legislation in Congress with an estimated 3.6 million Americans having lost their jobs since the recession began in December 2007. About half of them have lost jobs in the past three months.

The latest net job losses were far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.

With cost-cutting employers in no mood to hire, the unemployment rate bolted to 7.6 percent in January, the highest since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than economists expected.

Many economists said the job losses for February are likely to be just as bad, and they don't expect the labor market to return to decent health until 2011 at the earliest.

John Boschen, professor of economics at the College of William and Mary, said unemployment will continue to rise for the next three or four quarters.

"I think it will top out around 9 percent," he said.

Boschen said he expects the jobless rate will stay high for the next couple of years. "Even after the economy recovers, it takes a while for people to be called back to work."

The unemployment rate hit 10 percent in 1981 and 1982, when the Federal Reserve tightened monetary policy.

Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982, partly reflecting heavy losses at plants making autos and related parts. Construction companies got rid of 111,000 jobs. Professional and business services chopped 121,000 positions. Retailers eliminated 45,000 jobs. Leisure and hospitality axed 28,000 slots.

Those reductions swamped employment gains in education and health services, as well as in the government.

With no place to go, the number of unemployed workers climbed to 11.6 million. In addition, 7.8 million people were working part time -- a category that includes those who would like to work full time but whose hours were cut back, or those who were unable to find full-time work.

The average time it took for an unemployed person to find any job -- full or part time -- rose to 19.8 weeks in January, compared with 17.5 weeks a year ago.

For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures. That marked the biggest annual loss on record and was worse than the 2.6 million initially estimated last month.

Staff writer Carol Hazard and The Associated Press contributed to this report.