Unemployment Stays at 30-Year Low
Friday, November 3rd 2000, 12:00 am
By: News On 6
WASHINGTON (AP) â€” The nation's unemployment rate remained at a 30-year-low of 3.9 percent in October, the government said Friday in the last major economic report to be released before voters go to the polls to elect a new president.
The Labor Department report showed that even though the economy has slowed under the impact of six interest rate increases by the Federal Reserve, labor markets remain exceptionally healthy.
The unemployment rate for Hispanics dipped to a record low of 5 percent, down from 5.6 percent in September. The jobless rate for women edged down to 3.4 percent, the lowest level in 47 years, and the unemployment rate for blacks, at 7.3 percent, was near the record low of 7 percent set in September.
Economists said the low rates showed that the longest stretch of economic growth in U.S. history, nearly 10 years, has drawn more and more groups into the labor market.
Who is responsible for this prosperity and how it can be sustained have been major issues in the presidential race between Vice President Al Gore and Republican challenger Gov. George W. Bush.
Gore argues that Clinton-Gore administration fiscal policies created the record budget surpluses that spurred a business investment boom. He contends that Bush's proposed $1.3 trillion tax cut risks wiping out the surpluses and threatening a recession.
Bush, however, has argued that more credit for the good times belongs to congressional Republicans, who forced Clinton to balance the budget, and the inflation-fighting skills of Federal Reserve Chairman Alan Greenspan, a Republican.
President Clinton, brought off the sidelines in the campaign's closing days to energize the Democratic base, said that Friday's unemployment report ``was more good economic news for the American people'' with the 3.9 percent level ``half of what it was in 1992,'' when Clinton beat Bush's father to win his first term.
The latest report caught private economists by surprise. They had expected a slight uptick in the jobless rate, given the fact that economic growth slowed dramatically in the July-September quarter under the influence of the Fed's yearlong campaign to boost interest rates to slow growth and keep inflation in check.
The growth of new jobs did slow in October, with just 137,000 payroll jobs created, down from a gain of 195,000 in September.
``We are seeing an apparent slowdown in the employment figures, which is just what the Fed has been trying to engineer,'' said David Wyss, chief economist for Standard & Poor's in New York.
Allen Sinai, chief global economist at Decision Economics, predicted that the unemployment rate, which lags behind other economic changes, would start a gradual rise in the coming months and reach 4.5 percent in October of next year.
Most economists are forecasting a traditional soft landing in which growth slows enough to push the unemployment rate higher, but not enough to push the country into a recession. Most believe the Fed will not need to raise rates further to accomplish this goal.
Tight labor markets and the inflationary risk of higher wage demands they pose prompted the Fed to begin raising rates in June 1999.
The jobless report said average hourly wages rose by 0.4 percent in October, double the 0.2 percent increase in September.
But analysts noted that over the past year, wages have risen just 3.8 percent, a moderate increase that employers have been able to finance through strong gains in worker productivity rather than by increasing product prices.
With wages rising and unemployment dipping to levels not seen since 1970, economists forecasting the election based on economic models have been puzzled that Gore has lagged in the polls.
Some have theorized that the economic good times have lasted so long â€” the last recession ended in March 1991 â€” that voters are focusing on other issues.
In October, the growth in jobs included a gain of 34,000 in construction. Over the past year, the construction industry has added 272,000 jobs, accounting for one in 10 new jobs created during this period.
Manufacturing unemployment, which had fallen the previous two months, was unchanged in October even though layoffs continued in the auto industry.
Service industries, where most Americans work, added 99,000 jobs in October, despite the fact that temporary work agencies cut 82,000 jobs.
On the Net:
For the jobs report: http://stats.bls.gov:80/news.release/empsit.nr0.htm