U.S. Jobless Jump Likely To Lead To 11th Interest Rate Cut

ByJohn S. McClenahen In the wake of November's higher-than-expected increase in U.S. unemployment to 5.7%, Chairman Alan Greenspan and the other members of the Federal Open Market Committee (FOMC) are likely to cut the influential federal funds rate by at least 25 basis points when they meet in Washington on Dec. 11. Following 10 FOMC cuts so far this year, the federal funds rate is now at 2%. Of the 331,000 total jobs lost in November, manufacturing continued to bear the brunt of the downturn in the U.S. economy, notes Lois Orr, the acting commissioner of the Bureau of Labor Statistics. The bureau is the U.S. Labor Department agency that collects jobless data. Industry lost 163,000 more jobs in November, bringing to nearly 1 million the number factory jobs lost since March 2001, the month that the National Bureau of Economic Research says the current U.S. recession began. Workers in the electrical equipment, industrial machinery and fabricated metals sectors of the U.S. economy were among those experiencing the greatest job losses in November. "Those who mistakenly believed that the recession was nearly over just got a rude wake-up call," says Bruce Steinberg, chief economist at Merrill Lynch & Co., New York. He figures that the 331,000 jobs lost in November combined with the 468,000 lost in October is "the worst two-month unemployment performance since 1980, when credit controls put the economy into a tailspin."