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June 6, 2008

Americans are already suffering from a foreclosure crisis, imposingly high gasoline prices, and rising food costs. May showed a downgrade in the unemployment rate of 5.5% that hasn’t been seen since 1986. Over 49,000 jobs were cut this month. With the grim news came Wall Street sliding down more than 200 points in morning trading. Economists were surprised at the big increase in unemployment after forecasting a one-tenth of a percent drop to 5.1%. The nation’s employers have now cut payrolls for five continuous months.

Washington expressed disappointment at the news this morning, but said that the unemployment rate “is still lower than the average of the last three decades.” Jobs were severely cut last month in manufacturing, construction, professional and business services, and retailing. Gains were found in education, health fields, government, leisure, and hospitality.

The 5.5% unemployment amounts to 861,000 people out of work in May 2008, rising to 8.5 million total. Just a year ago, the jobless rate evened out at 6.9 million for a rate of 4.5 percent. A lot of people have been talking about the question of the nation being in a full-blown recession at least for the average American whose paycheck has only increased 0.3% in the midst of the economic breakdown. Federal Reserve Chairman Ben Bernanke has hinted that the central bank’s rate cut campaign is probably over for now.

The unemployment rate is expected to rise to 6 percent or more early next year. Employers won’t be hiring again any time soon until they see proof that the economy is growing again in the right direction. Much of the reason for the unemployment rate is the influx of students now entering the job market. This year marks the largest increase in teenage joblessness since 1948.

“This is an ugly report on the labor market,” said Allen Sinai, chief economist at Decision Economics Inc. in New York. “Most of the economy looks in recession.”