The U.S. unemployment rate jumped in March to the highest level since 1983 as the economy lost 663,000 jobs, threatening to keep spending subdued for months and delay any recovery.
The jobless rate increased to 8.5 percent from 8.1 percent in February, a Labor Department report showed in Washington -- consistent with the forecasts of 79 economists surveyed by Bloomberg. Employers have cut a total of about 5.1 million posts since the recession began, the biggest slump in the postwar era.
The job-market rout will make it tougher for President Barack Obama to follow through on his pledge to save or create 3.5 million jobs. Federal Reserve Vice Chairman Donald Kohn said today both the Obama administration and central bank must remain “flexible and open” to further measures to end what is likely to become the longest recession since the Great Depression.
“The hope and expectation is that things will get a little less dire in the second quarter as various stimulus efforts kick in,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, who used to work at the Fed.
U.S. service industries shrank faster than anticipated in March, separate figures showed today. The Institute of Supply Management’s nonmanufacturing index fell to 40.8 from 41.6 in February. Readings less than 50 signify a contraction.