US jobless figure is worst for 25 years

By Alan Beattie and Demetri Sevastopulo in Washington, and Alan Rappeport in New York
Published: March 6 2009 14:13 | Last updated: March 7 2009 16:19

President Barack Obama on Saturday warned that the US needed to act “swiftly and boldly” to tackle the recession which has propelled unemployment to its highest rate in a quarter of a century.

Government figures released on Friday showed that unemployment rose to 8.1 per cent in February, the highest rate since 1983, as another set of dire official figures showed staff being axed across the economy.

The number of jobs lost in February reached 651,000, the third consecutive month in which more than 600,000 posts have been shed – a sequence last recorded in 1939.

“These aren’t just statistics, but hardships experienced personally by millions of Americans who no longer know how they’ll pay their bills, or make their mortgage, or raise their families,” Mr Obama said in his weekly address.

“We will continue to face difficult days in the months ahead. But I also believe that we will get through this – that if we act swiftly and boldly and responsibly, the United States of America will emerge stronger and more prosperous than it was before.”

Investors had predicted sharp falls in employment, and there was a muted market reaction to the data on Friday. But downward revisions to job totals for previous months made the overall picture for the US job market look markedly worse.

The recession has accounted for 4.4m US jobs and the unemployment rate has nearly doubled from 4.4 per cent a year ago. Economists and policymakers were almost unanimous that there were no signs of optimism to be gleaned from the figures.

Christina Romer, chair of the White House Council of Economic Advisers, said: “There’s no way that we could or should put a positive spin on these. The American people are clearly suffering.”

Mr Obama has argued that the $787bn stimulus bill will save or create 3.5m jobs, saying the unemployment figures should leave the US public in no doubt that a large fiscal boost was needed to rescue the economy.

The unemployment figure means joblessness has reached the average for the whole of 2009 predicted by the White House in its recent budget, a forecast that some private sector economists and Republicans claimed was too optimistic.

America’s jobless totals have surged rapidly in the past year as US companies have moved swiftly to retrench their workforces. Because movements in the labour market trail the rest of the economy by several quarters, economists said there were inevitably more job losses and rising unemployment to come.

Peter Hooper, chief economist at Deutsche Bank in New York, said: “We were expecting bad news and we got it. This is a very serious recession and there is nothing in the near term to feel particularly good about.”

Copyright The Financial Times Limited 2009