The nation’s unemployment rate surged to the highest level in a quarter-century last month and, despite signs that the economic crisis might be near bottom, hundreds of thousands more Americans are likely to lose their jobs.
The pace of job loss is unprecedented in modern America. With 663,000 jobs eliminated in March alone, the unemployment rate jumped to 8.5 percent and the net job loss since the recession started at the end of 2007 topped 5 million. Almost two-thirds of those jobs were cut in the last five months.
And, since unemployment is historically a lagging indicator — lingering after recovery begins — the outlook is grim even with encouraging signs elsewhere.
“Once we hit recovery, it usually takes several months — up to five — for the [jobless] rate to come down,” said Diane Swonk, chief economist at Mesirow Financial.
More Top Picks Can You Reverse Heart Disease
Among the signs of possible economic life, orders placed with factories rose in February after a half-year of declines. Consumer spending also rose in February for the second month in a row, and a report on construction spending this week was better than expected.
In addition, the stock market, often considered a leading though imperfect indicator, has been rising.
Then the money from the $787 billion stimulus package by President Barack Obama’s administration is beginning to flow into the economy. Mortgage rates are easing. Investors have shown confidence in the Treasury Department’s plan to deal with the toxic assets that have crippled banks.
“The knife’s still falling. It’s just not falling as fast,” Swonk said.
The G-20 Summit of world leaders in London this week showed a public commitment to a coordinated global response.
“A lot of action is being taken, and I think that’s sort of boosting confidence,” said Marisa DiNatale, a senior economist at Moody’s Econ omy.com. “If businesses and consumers feel as though things are going to get better or that we’re nearing a bottom, that facilitates that cycle of getting out there and spending money, buying cars or computers, business equipment.”
Still, most economists forecast that job losses will continue through this year, with many seeing the unemployment rate peaking at 10 percent or more.