July 17 (Bloomberg) -- Six U.S. states posted record unemployment rates in June, while Michigan became the first to top 15 percent in a quarter century, threatening to deepen budget crises in capitals across the nation.
The total number of states with at least 10 percent joblessness rose to 15, the Labor Department reported today in Washington. Georgia, Nevada, Rhode Island, South Carolina, Florida and Delaware all reached their highest level of joblessness since records began in 1976.
Today’s figures are a blow to states already hammered by falling income and sales-tax receipts. California suffered the biggest drop in payrolls among all states, at a time when its lawmakers are struggling to narrow a $26 billion budget gap that may send its debt rating below investment grade.
“It’ll easily be mid-2010 before we see unemployment rates leveling off,” said Steven Cochrane, director of regional economics at Moody’s Economy.com in West Chester, Pennsylvania. Should the labor market fail to recover before the Obama administration’s $787 billion stimulus spending runs out, “states will face more problems,” he said, as they struggle with lower tax revenue and higher spending on jobless benefits.
California’s jobless rate held at a record 11.6 percent for a second month, after May’s level was revised from a previously reported 11.5 percent. Unemployment in the District of Columbia exceeded 10 percent for a second month, rising to 10.9 percent.
Florida’s unemployment rate climbed to 10.6 percent as job losses that began in the construction industry spread.
10% Unemployment
Unemployment in Georgia, the ninth-largest U.S. state by population, exceeded 10 percent for the first time ever, increasing to 10.1 percent last month from 9.6 in May. Alabama’s jobless rate also crossed that threshold, jumping to 10.1 percent from 9.8 percent.
Employers across the U.S. are trimming positions and delaying hiring even as reports show housing and manufacturing are stabilizing. The economy has lost about 6.5 million jobs since the recession began in December 2007. President Barack Obama and economists surveyed by Bloomberg News say national unemployment will reach 10 percent this year.
“No region of the U.S. is immune,” said Rebecca Braeu, an economist at John Hancock Financial Services in Boston. “The rising unemployment rate is clearly going to hurt consumption. It’ll limit the recovery.”
Payrolls in the world’s largest economy fell by 467,000 last month, more than forecast, while the jobless rate jumped to 9.5 percent, the highest level in 26 years. The rate will reach 10 percent by yearend and average 9.8 percent for 2010, according to the Bloomberg survey.
Michigan, Autos
Michigan, the heart of the U.S. auto industry, jumped to 15.2 percent from May’s 14.1 percent.
General Motors Co. and Chrysler Group LLC have emerged from bankruptcy, and economists predict the slump in auto production may ease as government efforts to stoke consumer spending, including cash payments aimed at reviving car sales, take hold.
Financial firms continue to bleed jobs. New York City’s unemployment rate jumped to 9.5 percent in June, the highest level since 1997, while the state jobless rate rose to 8.7 percent from 8.2 percent in May, figures showed yesterday.
New Jersey’s rate increased to 9.2 percent in June from 8.8 percent, while unemployment in Connecticut held at 8 percent.
Improving home sales and smaller declines in manufacturing have caused economists to raise projections for growth. Growth will average 1.5 percent in the July-to-December period, helped by stabilization in consumer spending, which accounts for about 70 percent of the economy, the Bloomberg survey showed.
Job Seekers
Even so, Americans without jobs aren’t optimistic.
“I don’t think the economy is turning around,” said Gary Lucas, 32, of Atlanta, who was laid off six months ago from a job installing fire-protection sprinklers in buildings. “I don’t see it yet.”
Lucas said he has put out more than 30 applications with only a few expressions of interest.
Amanda Wright, a certified nurse’s assistant, said she’s been searching for work since 2007, “but nobody is biting.” Wright, 22, was unable to get enough financial aid to complete a course in nursing radiology when she returned to school this year, and is tapping her savings and using discounts she gets through her mother’s government job to put her one-year-old son in daycare.
“I’ve registered with all the unemployment offices and temp agencies, but nobody calls,” said Wright, who also has certifications in customer service and data entry and is looking for jobs in Alabama and elsewhere in Georgia. “The most frustrating part is sitting by the phone, the waiting.”
