Poised For A Rebound.

The U.S. unemployment rate increased to 5.4 percent in October, showing the full impact of the Sept. 11 terrorist attacks on an economy that may have been ready for a recovery, according to the Employment Policy Foundation. At 7.7 million, the total number of displaced workers is 2.2 million higher than the 5.5 million employees who were out of work in October 2000.

“Today’s unemployment report shows the unfortunate results of a serious national tragedy,” said EPF President Ed Potter. “Before Sept. 11, economic indicators suggested that the economy was about to turn around. The terrorist attacks have disrupted normal economic activity and shaken consumer confidence. A recession now seems inevitable.”

The fall in total employment in both the Bureau of Labor Statistics (BLS) payroll survey, down 415,000 from September, and the BLS household survey, down 619,000 from last month, provide a clear signal of economic contraction. For the first time since the economy began slowing last year, the monthly payroll total is below its level of 12 months earlier.

But among the employment data, there are signs of the economy’s resilience, Potter said. At 5.4 percent, October’s unemployment rate still remains lower than the average rate for the 1970s (6.3 percent), 1980s (7.1 percent) and the 1990s (5.6 percent). In fact, the unemployment rate was as high as 5.4 percent as recently as December 1996.

In addition, the median duration of unemployment at 7.4 weeks remains low compared to the nine-plus week average that characterized the early 1990s, when the country experienced its last full-blown recession. The proportion of workers who have been displaced for more than 26 weeks remained relatively unchanged at 11.4 percent of unemployed, compared to 11.3 percent in September. And, the total number of long-term unemployed, at 888,000, is less than half of the 2.1 million of long-term unemployed in 1992.

“Despite overall job losses, employment of skilled and educated workers remains high,” Potter said. “This trend shows the fundamental shift in our economy to jobs that demand knowledge, skills and analytical capabilities.”

Jobs for college graduates age 25 and over increased by 259,000 in October to 36.3 million. The unemployment rate for college graduates also remained low at 2.7 percent.

The number of workers with college degrees is still the highest its ever been and is the largest education segment of the workforce, Potter said.

For more information at http://www.epf.org.

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