A June 6 employment report from the Labor Department finds that, last month, the U.S. unemployment rate posted its sharpest one-month increase since February 1986, going from 5.1 to 5.5 percent. This information sent the Dow Jones Industrial Average falling by 394.64 points, resulting in a 3.1 percent drop and the biggest single-day drop since February 27, 2007. The jobs report, combined with comments from analysts and the growing tension between Israel and Iran, also resulted in a $10.75 increase (8.8 percent) in the price of crude oil futures.
The Wall Street Journal noted that the jobs report was especially troublesome because labor markets are key to the economic outlook. “Until last month, they had maintained enough resilience to support consumer spending despite big drags from the housing slump and soaring energy prices that have sapped demand for big-ticket items. … But that could change, and economists worry that households can’t withstand the mix of falling employment and soaring prices for food and energy much longer, especially if labor markets weaken.”
Some economists cautioned that the jobs report tends to be volatile between April and July because of an increase in the number of young people trying to find jobs, a view seconded by U.S. Secretary of Labor Elaine Chao, who said the increase “reflects the fact that unusually large numbers of students and graduates are entering the labor market.”
The jobs report also saw increases in the unemployment rate for individuals at all levels of education over last year. For example, 5.9 percent of high school dropouts were unemployed in May 2007, compared to 8.3 percent this year; 4.1 percent of high school graduates were unemployed last year, compared to 5.2 percent in 2008. College graduates saw the smallest change, as only 1.9 percent were looking for jobs in May 2007, compared to 2.2 percent this year.
A recent survey by Capital One finds that recent college graduates are skeptical of the current job market, with less than half (48 percent) saying that, although there are some jobs available, there are not enough for all new graduates; 44.8 percent believe that there are fewer job opportunities than in there were in previous years. Despite this skepticism, 85 percent expect to find a job within six months.