U.S. Unemployment Rate Probably Topped 9%, Highest Since 1983
June 5 (Bloomberg) -- Unemployment in the U.S. probably exceeded 9 percent in
May for the first time in more than 25 years, underscoring the threat job
losses pose for an economic recovery, a government report may show today.
The jobless rate jumped to 9.2 percent, the highest level since 1983, according
to the median estimate of 75 economists in a Bloomberg News survey. Employers
probably cut 520,000 workers from payrolls, the smallest decrease in seven
months.
A deceleration in firings, coupled with stabilization in housing and
manufacturing, signal the recession is easing. Still, Americans are spending
less and saving more as home values fall and companies from American Express
Co. to General Motors Corp. pare jobs, meaning any expansion may be muted.
“The worst is over for the job market and for the economy,” said John Silvia,
chief economist at Wachovia Corp. in Charlotte, North Carolina. “It’ll still be
a tough environment. Firms are going to be cutting through the end of 2009, and
it’ll take time for all those jobs to come back.”
The Labor Department report is due at 8:30 a.m. in Washington. Economists’
estimates for unemployment ranged from 9 percent to 9.4 percent. The rate was
at 8.9 percent in April.
Forecasts for payrolls ranged from declines of 450,000 to 600,000. Job losses
peaked at 741,000 in January, the most since 1949.
The world’s largest economy has already lost 5.7 million jobs since the
recession began in December 2007. That’s the biggest drop in any post-World War
II economic slump.
Bernanke on Jobs
The U.S. may suffer additional “sizable” job losses, Federal Reserve Chairman
Ben S. Bernanke said this week in testimony to lawmakers. While economic growth
will return “later this year,” he said, unemployment will rise “into next
year.”
Manufacturers reduced payrolls by 150,000 in May, according to the median
estimate of economists surveyed.
Markets are healing even as the economy is still struggling. The Standard &
Poor’s 500 index is up 39 percent since reaching a 12-year low on March 9.
The bankruptcies of General Motors and Chrysler LLC may generate more job
losses in coming months. AutoNation Inc., the largest U.S. new-vehicle
retailer, plans to close seven showrooms, while Visteon Corp., the former
parts-making unit of Ford Motor Co., and chassis manufacturer Metaldyne Corp.
also filed for bankruptcy.
