Hurting for work: 438,000 jobs lost and worse is still to come
WASHINGTON -- Unemployment lines, painfully long this month, are only going to get longer.
The nation lost jobs for a sixth month in a row in June, a storm of pink slips drenching this year's holiday for more than 60,000 Americans and leaving thousands more worried about the future.
Weighed down by energy prices and the housing crisis, employers laid off workers in stores, factories and forsaken building sites.
With more job cuts expected in coming months, there's growing concern that many people will pull back on their spending later this year when the bracing effect of the tax rebates fades, dealing a dangerous setback to the shaky economy. These worries are rekindling recession fears.
In June alone, employers got rid of 62,000 jobs, bringing total losses so far this year close to a staggering half-million -- 438,000, according to the Labor Department's report released Thursday. The economy needs to generate more than 100,000 new jobs a month for employment to remain stable.
The jobless rate held steady at 5.5 percent after jumping in May by the most in two decades. Still, June's jobless rate was considerably higher than the 4.6 percent of a year ago. And it is expected to climb through the rest of this year and top 6 percent early next year.
"The economy will get worse before it gets better," said Sung Won Sohn, an economics professor at California State University.
Just in the past few days, Chrysler LLC said it would close a plant and Starbucks Corp. said it would shut some 600 stores in the next year, meaning more lost jobs ahead. American Airlines recently said it may cut flight attendant jobs.
When companies do have openings, job hunters are in for more competition.
"I get resumes upon resumes upon resumes when I put up job postings," said Jeff Posner, president and owner of e-ventsreg.com, a small New Jersey firm that handles registration and check-ins for trade shows.
There were 8.5 million unemployed people as of June, up from 7 million a year earlier.
Heavy job losses were reported in construction, manufacturing and financial services -- the worst casualties of the housing, credit and financial debacles. Cutbacks also came in retailing, temporary help, trucking, publishing and elsewhere. That more than swamped job gains in other places including health care, education, hotels, bars and restaurants and the government.
The economy is the top concern of voters and will figure prominently in their choices for president and other elected officials come November. The faltering labor market is a source of anxiety not only for those looking for work but also for those worried about keeping their jobs during uncertain times.
When it comes to handling the economy, 32 percent prefer Democratic contender Barack Obama, while 28 percent want GOP rival John McCain, according to a recent AP-Yahoo News poll.
"Far too many Americans [are] struggling to provide for their families because of the failed policies of the last eight years," Obama said Thursday.
"Americans across this country are hurting and today's jobs numbers are just the latest indication," McCain said. "Washington can no longer abdicate its responsibility to act. Our focus must be clear: enact policies to create jobs today."
Other economic news revealed more weak spots.
* The number of newly laid off people signing up for unemployment insurance rose sharply last week. New applications jumped by 16,000 to 404,000, the highest level since late March.
* The nation's service sector -- generally an engine for the economy -- contracted in June. The Institute for Supply Management's index of the service sector fell to 48.2 in June from 51.7 in May. A reading below 50 signals activity is shrinking, while a reading above that suggests activity is expanding.
On Wall Street, investors took the latest batch of economic reports in stride. The Dow Jones industrials closed up 73.03 at 11,288.54.
In political circles, though, the latest news spurred calls from Democrats to take more steps to aid the economy. The Bush administration thinks the government's $168 billion stimulus effort, including the rebates, should be sufficient but hasn't ruled out further action.
With inflation concerns growing, the Federal Reserve last week ended an aggressive interest rate-cutting campaign, started last September to shore up economic growth.
Fed chairman Ben Bernanke and his colleagues are caught between risky crosscurrents of plodding economic growth and spiraling energy and food prices. Lowering interest rates further could worsen inflation. But boosting rates to fend off inflation could hurt the fragile economy. Given the state of the job market and continued damage from the housing slump, the Fed probably will leave rates alone when policymakers meet on Aug. 5, some economists suggest.
On the other side of the Atlantic, the European Central Bank boosted its key interest rate Thursday in an effort to rein in escalating inflation.
In the U.S. wage growth for workers is slowing.
Average hourly earnings grew by just 3.4 percent over the past 12 months, the smallest annual increase since January 2006. Paychecks aren't stretching as far because prices for gasoline, groceries and other things are rising more quickly.
Oil prices on Thursday briefly touched a new high of $146 a barrel, while gasoline prices hit a new record of $4.10 a gallon, according to AAA, the Oil Prices Information Service and Wright Express.
Some economists fear that when the energizing force of the tax rebates fades, the economy could be in for another rough patch especially if job and wage growth continue to falter.
There's been a lot of talk about whether the economy is on the brink of, or has fallen into, its first recession since 2001. The unofficial determination, made by a panel of academics, usually comes well after the fact. The panel takes into account economic activity, as well as employment, income and other things.
Brian Bethune, economist at Global Insight likened the current situation to "a slow-motion recession. It's kind of like a recession by a thousand cuts."