U.S. Unemployment Rate Jumps To 8.1 Percent

What's the big deal with 8.1 percent?

Everyone is talking about the fact that the unemployment rate is now 8.1 percent? Why is this important and what does it mean for you? Let's see if we can find some answers.

NPR.org, March 6, 2009.

Employers cut 651,000 people from already thinning payrolls in February, pushing the unemployment rate to 8.1 percent, the Labor Department reported Friday.

The number was even worse than many economists had expected and is a substantial increase from 7.6 percent in January. The rate is the highest since 1983.

"Since the recession began, the rise in unemployment has been concentrated among people who lost jobs, as opposed to job leavers or people joining the labor force," said Bureau of Labor Statistics Commissioner Keith Hall.

Cutbacks came across economic sectors in a brutal reminder of how deep and broad-based the recession has become.

January's job cuts were revised to show a steep decline of 655,000, while December's payrolls losses were adjusted to 681,000, the deepest since October 1949. Since the start of the recession in December 2007, the economy has purged 4.4 million jobs, bleeding more than half of those in just the past four months.

"It's another very bad number in February," Nariman Behravesh, chief economist of Global Insight, told NPR.

"It still looks like the jobs market is in something of a free fall," he said. "None of these numbers provide any room for optimism or hope yet."

Hugh Johnson, the chairman and chief investment adviser of investment firm Johnson Illington Advisors, said Friday that leading indicators point to more job losses for "at least the foreseeable future."

"Let's call it three months, probably six months," Johnson told NPR. "I think the most optimistic outlook is that the economy will start to recover in the third quarter. And, candidly, the stock market's telling us that that may be too optimistic an outlook."

Some 168,000 manufacturing jobs were lost in February, after 257,000 positions in that sector were shed in the previous month. The construction industries lost an additional 104,000 jobs after 118,000 were cut in January.

The service industry slashed 375,000 positions after shedding 276,000 in January. Financial companies reduced payrolls by 44,000. Leisure and hospitality firms chopped 33,000 positions.

The few areas that were spared included education and health services, as well as government, which boosted employment last month.

President Obama, speaking to police academy graduates in Columbus, Ohio, later Friday called the 4.4 million job losses in the last 14 months "astounding," saying a cycle of job losses is "not the future I accept for the United States."

A total of 12.5 million workers are now classified as unemployed. In addition, the number of people forced to work part time for "economic reasons" rose by a sharp 787,000 to 8.6 million, the Labor Department said.


You can listen to a great report about this situation from Planet Money. Here is the link:
8.1