The nation's unemployment rate bolted to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, the government said Friday. It was stark proof the economy is almost certainly in a recession.
The new snapshot, released by the Labor Department, shows the crucial jobs market deteriorating at an alarmingly rapid pace.
The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994. Employers have cut jobs each month this year.
Despite this latest bleak economic news. the stock market rebounded by more than 190 points in early trading. By mid-morning, the Dow was up 193.70, putting it at 8889.40.
Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3 percent in June 2003.
Employers got rid of 240,000 jobs in October, marking the 10th straight month of payroll reductions.
Job losses in August and September turned out to be much deeper. Employers cut 127,000 positions in August, compared with 73,000 previously reported. A whopping 284,000 jobs were axed last month, compared with the 159,000 jobs first reported.
So far this year, a staggering 1.2 million jobs have disappeared.
The employment market is much weaker than economists expected. They were forecasting the unemployment rate to climb to 6.3 percent in October and for payrolls to fall by around 200,000.
Job losses were widespread. Factories cut 90,000 jobs, construction companies got rid of 49,000 jobs, retailers cut payrolls by 38,000, professional and business services reduced employment by 45,000, financial activities cut 24,000 jobs, and leisure and hospitality axed 16,000 positions.
All that more than swamped some gains elsewhere, including in the government, as well as in education and health care.
Racing to assemble his new Democratic Cabinet, President-elect Barack Obama will huddle with economic advisers later on Friday. His team has been in close contact with the Bush administration to pave the way for a smooth hand-off of power.
All the economy's woes — a housing collapse, mounting foreclosures, hard-to-get credit and financial market upheaval — will confront Obama when he assumes office early next year. And, the employment situation is likely to get worse.
Many expect the jobless rate to climb to 8 percent, possibly higher, next year. In the 1980-1982 recession, the unemployment rate rose as high as 10.8 percent before inching down.
To provide fresh relief, House Speaker Nancy Pelosi said Democrats, in a lame-duck session later this month, are pushing to enact another round of economic stimulus of around $100 billion.
Average hourly earnings rose to $18.21 in October, a 0.2 percent increase from the previous month, according to the Labor Department report. Over the past year, wages have grown 3.5 percent, but paychecks aren't stretching that far because high food, energy and other prices has propelled overall inflation at a faster pace.
To prevent the country from sinking into a deep and painful recession, the Federal Reserve last week ratcheted down interest rates to 1 percent and left the door open to further reductions.
The economy has lost its footing in just a few months. It contracted at a 0.3 percent pace in the July-September quarter, signaling the onset of a likely recession. It was the worst showing since 2001 recession, and reflected a massive pullback by consumers.
As U.S. consumers watch jobs disappear, they'll probably retrench even further, spelling more trouble for the sinking economy.
That's why analysts predict the economy is still shrinking in the current October-December quarter and will contract further in the first quarter of next year. All that more than fulfills a classic definition of a recession: two straight quarters of contracting economic activity.
Copyright 2008 The Associated Press.