Jobless rate at highest level since ’83

WASHINGTON - At least it’s not all bad anymore.

The US unemployment rate climbed last month to 9.7 percent - the highest in nearly a generation - but the number of job losses was less than expected and the smallest monthly total in a year.

“It’s good to see the rate of job losses slow down,’’ said Nigel Gault, chief US economist at IHS Global Insight. But with unemployment rising, “there isn’t the underlying fuel there for strong consumer spending growth,’’ which is vital for a strong recovery.

Employers shed 216,000 jobs in August, the Labor Department said yesterday. That was 9,000 fewer than expected but a far cry from the job creation required to rejuvenate the economy: about 125,000 new jobs each month just to keep the unemployment rate from increasing.

The unemployment rate rose three-10ths of a percentage point since July, reaching its highest level since 1983, when it was 10.1 percent. Economists predict that the jobless rate will peak above 10 percent by the middle of next year.

At the same time, many analysts say the economy should grow by a healthy 3 to 4 percent in the third quarter, pulling the United States out of the longest recession since World War II.

Most of that improvement, though, stems from auto companies and other manufacturers refilling their depleted stockpiles. Those inventories had plummeted as factories and retailers sought to bring goods more in line with reduced sales during the recession. Without stepped-up demand from consumers, any current growth might not last.

The Obama administration’s $787 billion stimulus package of tax cuts and increased spending contributed to the improvement, along with the popular cash for clunkers program. An $8,000 tax credit for first-time home buyers has also helped boost housing sales and stabilize prices.

Yet economists worry that none of that will be enough to sustain an economic recovery once the government’s efforts fade. As job losses persist and the unemployment rate climbs, even people with jobs will remain anxious about losing them and about spending too much.

For now, the August unemployment report sketched a bleak portrait of the job market. The number of jobless Americans jumped by nearly 500,000 to 14.9 million.


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