Grim report on jobs raises new anxiety Economy seen slipping back into recession

December 07, 1991|By James Risen | James Risen,Los Angeles Times

WASHINGTON -- The nation's employers unexpectedly shed nearly a quarter of a million jobs in November, the government reported yesterday, raising the specter of a "double-dip" recession and prompting the Federal Reserve Board to cut interest rates to break the economy's fall.

The job report was the worst since the depths of last winter's recession.

The bleak figures stunned Washington policy-makers and further undermined what until recently had been a firm consensus among Bush administration officials and many economists that the worst of the recession was over and that a mild recovery was under way.

These figures are horrible," said one administration official, requesting anonymity.

"For all practical purposes, this recession isn't over," said Donald Ratajczak, an economist at Georgia State University. "It looks like the recession never ended, like we just had false echoes of a recovery."

Mr. Bush, speaking to reporters in California, said the jobless rate was "far too high," but noted that some economists had predicted the unemployment report would be even worse. Mr. Bush said that he was "absolutely confident things are going to be better."

Democrats seized on the unemployment figures to attack Mr. Bush's handling of the economy.

"The sinking economy needs a life preserver, yet the administration remains content to stand on the shore shouting words of encouragement," said Sen. Paul S. Sarbanes, D-Md., co-chairman of the Joint Economic Committee.

The nation's economy lost 241,000 payroll jobs last month, far worse than even the most pessimistic expectations, the Department of Labor reported. At the same time, a shrinking labor force left the November unemployment rate unchanged at 6.8 percent.

The rate didn't rise because the labor force shrank by nearly 300,000 in November, suggesting that more and more unemployed workers have given up hope and stopped looking for new jobs. Maryland's jobless rate, reported one month later than the national figure, climbed to 5.5 percent in October from 5.2 percent the month before, the state reported yesterday, as employment fell and most other indicators showed the state's economy deteriorated.

The data showed employment in Maryland fell by 35,300 jobs in October, to 2.42 million. Because more than 28,000 jobless people no longer looked for work after September, the number of officially unemployed rose by only 7,200, to 140,417.

Unlike the national data, Maryland's numbers are not adjusted to reflect seasonal changes.

The state figures are particularly grim because the unemployment rate typically drops in October. Not since 1981 has the jobless rate risen from September to October in Maryland.

The Federal Reserve Board responded quickly to the national jobless report by cutting its benchmark "federal funds" interest rate -- the amount banks charge each other for overnight loans -- by a quarter of a percentage point, to 4.5 percent. It was the 14th reduction in the fed funds rate orchestrated by the central bank since the recession began, and brought the rate to its lowest level since 1972.

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