U.S. jobless rate down scant 0.1% Economists fear 'triple dip' recession

October 03, 1992|By Ian Johnson | Ian Johnson,New York Bureau

NEW YORK -- In the last look at jobs before the Nov. 3 presidential election, the government reported yesterday a slight dip in the September unemployment rate. But the numbers did little to alter a bleak economic picture that has some economists uttering two dreaded words: triple dip.

"Economists would debate the use of the term, but in lay language, the "triple dip" is here. The economy is, for the third time in three years, dead in the water," said Jay N. Woodworth, senior domestic economist for Bankers Trust Corp.

While the drop in the unemployment rate to 7.5 percent, from August's 7.6 percent, provided some possible political cheer for the White House, economists believe the bulk of the improvement came largely because 164,000 people stopped looking for work last month, partly driven by the start of school. A person has to be seeking work to be considered unemployed.

In fact, despite the drop in the rate of unemployment, a separate report yesterday showed that employers cut another 57,000 jobs from their payrolls in September, according to the Labor Department.

These latest reports came after weeks of uniformly pessimistic economic reports that show broad economic deterioration after a pickup earlier this year.

Reflecting the fact that the unemployment rate is one of the most sensitive economic indicators, both main candidates for president jumped on yesterday's report.

"It's the third consecutive month of moving in the right direction on unemployment," President Bush said in an interview on ABC-TV's "Good Morning America" yesterday. "This is encouraging news."

Challenger Bill Clinton emphasized the minute size of the decrease during a rally in front of an employment office in Ohio, calling the report the last "report card" before the election and a stark indictment of failed Republican policies.

Independent candidate Ross Perot, asked about the change in unemployment, said: "That means somebody got a job, so that's good news."

Analysts had predicted that the rate would increase to 7.7 percent from August's 7.6 percent level. While the one bright spot was that the unemployment rate fell for the month, the market had hoped for more negative news to spur the Federal Reserve into cutting interest rates further.

But the Fed announced no new interest rate cuts yesterday, though some believe this could happen at a meeting next week.

The Fed's inaction, combined with the figures, led the Dow Jones industrial average to fall 53.76 points yesterday, to 3,200.61 -- its lowest close since April. Lower interest rates would push up the stock market by making other investments, such as bonds and money market funds, less attractive.

Gloom on Wall Street and a pessimistic prognosis for the economy was also fed yesterday by a Commerce Department report that showed factory orders falling in August for a second month. The 1.9 percent decline followed an 0.9 percent drop in July, emphasizing stagnation in the manufacturing sector.

The Commerce Department also said the backlog of unfilled orders declined 0.8 percent, to $482.1 billion, the lowest level since February 1989. It was the 12th straight decrease and an indication of possible production cutbacks and layoffs ahead.

Yesterday's three reports followed others showing a similar decline or stagnation in production.

Together, they present a picture that mirrors last year, when the economy improved after coming out of recession in the first half of 1991 but then faltered badly. This year, the economy also showed promise at the start, but has since grown only imperceptibly.

"The news is mostly bad. The figures that came out in September are basically worse than last month's figures, despite that slightly improved unemployment rate," said Anirvan Banerji, a research economist at the Columbia Business School's Center for International Business Cycle Research.

According to the unemployment report, most job losses were concentrated in manufacturing, construction and the government sector. Manufacturing was especially depressed, shedding 26,000 jobs following a huge 92,000 job drop in August.

The largest declines were in the automobile, aircraft and apparel industries. Employment in the construction industry also fell in September.

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