There are further signs of economic slowdown in the United States as the jobless rate in May rose by one-half percent to 5.5 percent. VOA's Barry Wood reports from Washington, the latest unemployment statistics and sharply higher oil prices triggered a sharp fall in stock prices early in the day.
At 5.5 percent, the U.S. unemployment rate is now at its highest level in three-and-a-half years. The economy lost 49,000 jobs in May, a figure in line with expectations. However, the soaring jobless rate came as a shock, and reflected a sharp rise in the number of people looking for work.
"There is no question it is a huge spike," said Ed Lazear, who is the chief economist for President George Bush. "The way I would look at it is that you want to know why the thing went up so dramatically. This is not a reflection of massive layoffs in the economy. It tends to be primarily a reflection of a large number of new entrants and re-entrants into the labor market."
Roger Kubarych of Unicredit Global Research in New York says the new entrants into the labor force are college students who are not finding summer jobs.
"The report that only one of three college students [is] able to find summer jobs is very recessionary. We haven't seen a figure like that since the early 90s," said Kubarych.
Both Lazear and Kubarych spoke on Bloomberg Television.
The stock market plunged on news of the jobless report. The Dow Jones Industrials lost nearly 250 points in the first two hours of trading, giving back all of the impressive gains of the previous trading session.
Oil prices compounded the distress on Wall Street. Prices had peaked at $135 a barrel two weeks ago, and had been falling gradually since then. However, amid further declines in the dollar, oil prices turned around on Thursday. Rising gasoline and food prices, combined with a credit squeeze and falling home prices have driven U.S. consumer confidence to the lowest levels in 30 years.
Technically, the U.S. economy is not in recession, although many economists say it is. The economy has grown at an anemic 0.6 to 0.9 percent annual rate since the fourth-quarter of 2007. Over 300,000 jobs have been lost this year, while, over the same period, oil prices have surged by 40 percent from already record high levels.