Va. jobless rate rises to 7.2%

Virginia's unemployment rate nudged up by a tenth of a percentage point to 7.2 percent last month, the Labor Department reported yesterday.

Unemployment topped 10 percent in 15 states and the District of Columbia in June.

The rate in Michigan, home to the nation's struggling automakers, surpassed 15 percent, the first time any state hit that mark since 1984.

Virginia's was the 14th lowest unemployment rate in the country. The increase from 7.1 percent in May was not a surprise.

"We thought it would be up from May to June," said William F. Mezger, chief economist at the Virginia Employment Commission. "The increase is due mainly to high school students coming into the labor market."

Mezger said this is the worst summer hiring season in 28 years.

The Federal Reserve this week projected that the national unemployment rate, currently at a 26-year high of 9.5 percent, will pass 10 percent by the end of the year. Most Fed policymakers said it could take "five or six years" for the economy and the labor market to get back on a path of long-term health.

How consumers behave in the face of rising unemployment will figure prominently in shaping a broader rebound. If they go back into hibernation and sharply cut spending like they did at the end of last year, the recovery could cave in. More likely is that consumers will stay cautious, making for a fragile and slow-moving national economic turnaround, economists said.

"With so much uncertainty, companies will stay in cost-cutting mode and consumers will watch their spending," said Steve Cochrane, managing director at Moody's Economy.com.

The news was not all bad. North Dakota, helped by the oil business, reported the lowest unemployment rate, 4.2 percent, in June.

Still, the state unemployment report underscored the damage that the longest recession since World War II has inflicted on companies, workers and communities, and the challenges the economy faces getting back on its feet.

A common theme running through states suffering from high unemployment was heavy layoffs tied to the troubled auto industry and the collapse of the housing market. Workers in manufacturing, construction, retail and finance have been the hardest hit.

"A lot of older industries are having to shut down, and many of these jobs will never come back," said Bernard Baumohl, chief global economist at the Economic Outlook Group.

Staff writer Emily C. Dooley and The Associated Press contributed to this report.