Unemployment of 10% Spreads, Risking U.S. Recovery

More than one-quarter of American states now have unemployment rates higher than 10 percent, and all but two saw a further job-market deterioration in May.
Tennessee and Indiana joined the rank of states, now 13, that have jobless rates exceeding 10 percent, and eight states - - including California, Florida and Georgia -- reached their highest level of joblessness in May since records began in 1976, the Labor Department reported today in Washington.
The figures make it likely President Barack Obama, whose home state of Illinois also passed 10 percent for the first time since 1983, was correct this week in forecasting the national unemployment rate will reach that level this year. With no region escaping the rout, consumers across the country will probably curtail their spending, preventing any boom out of the deepest recession in half a century, analysts said.
“It’s tough everywhere,” said Mark Vitner a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Nobody’s really been spared.” The biggest increases in unemployment will be in states most dependent on manufacturing, construction and financial services, he said.
For the country, “unless hiring magically picks up, a 10 percent unemployment rate is pretty much baked in,” Vitner said.
Jump in Michigan
Michigan’s jobless rate, at 14.1 percent, showed the biggest jump from April and remained the highest in the nation. The bankruptcy of General Motors Corp. and Chrysler LLC is likely to deepen the labor-market slump in the Midwest and ripple through other areas and industries.
Kentucky and Florida were the other two states that passed the 10 percent mark last month. Those remaining on the list included California, Ohio, Oregon, Rhode Island, Nevada and North and South Carolina.
Overall, 48 states and the District of Columbia posted increases in their unemployment rates in May from the prior month. Nebraska was the only one to post a drop, to 4.4 percent from 4.5 percent; Vermont held at 7.3 percent, the Labor Department said.
Payrolls decreased in 12 states in May, led by California with a 68,900 loss, and Florida, where 61,000 workers were dismissed. North Dakota and Alaska reported gains in employment.
Six Million
Nationwide, payrolls fell by 345,000 in May after a 504,000 decline in April, government figures showed earlier this month. The economy has lost 6 million jobs since the recession began in December 2007. The jobless rate reached a 25-year high of 9.4 percent last month.
“It’s different times,” said Stephanie Moyna-Gilbert, a 36-year-old mother of three from Fishers, Indiana. “This is absolutely the longest time I’ve been unemployed.”
She lost her job as a recruiter and human-resource manager for Interactive Intelligence Inc., an Indianapolis-based telephone software maker, in December, and is finding it hard to find a full-time position for herself after four years of hiring and training staff.
Moyna-Gilbert is doing some consulting work to expand her professional contacts and try to bring home some cash. Still, “the income isn’t there until I place people,” she said. “Being without benefits isn’t a good thing.”
Employers remain reluctant to hire even as there are signs that the worst of the job cuts are over. A Bloomberg News survey this month showed economists project the jobless rate will reach 10 percent by year-end and average almost that rate in 2010.
Obama, in a June 16 interview with Bloomberg News, said he couldn’t predict when unemployment will start to decline because it was a “lagging indicator.”
“As soon as this economy has stabilized, we want the market to do what it does best, and that is produce jobs, invest,” he said