Unemployment jumped to its highest level in more than two years in
December, fueling fears of recession and sending stocks sharply lower.
unemployment rate rose a surprising 0.3 percentage points in December
to 5 percent of the labor force. That was the highest jobless rate
since November 2005, after the Gulf Coast hurricanes slammed the
Joblessness had not jumped as quickly since 2001, when the last recession occurred.
with a paltry December increase in establishment payrolls of 18,000
jobs, the news caused stocks and the dollar to fall Friday and talk of
recession to grow.
The Dow Jones industrial average fell 256.54
points, or 1.96 percent, closing at 12,800.18. The Standard &
Poor’s 500 stock index fell 2.46 percent, and the Nasdaq composite
index fell 3.77 percent.
“It’s a scary number, no question about
it,” Joe Balestrino, senior portfolio manager at Federated Investors,
said of the unemployment report. “No matter how good you wanted to feel
about the economy averting a recession, there is far less conviction
than even two or three days ago.”