Jobless Rate Down to 9.7%; 20,000 Jobs Lost in January

The United States economy shed 20,000 jobs in January, the government said Friday, deepening concern that relief from the deepest economic downturn in a generation would be slow to come. But the unemployment rate fell to 9.7 percent from 10 percent in December.

As the broader economy gains steam and crucial sectors like manufacturing spring back to life, analysts say the recovery appears to be intact. But the nation’s stubbornly high unemployment rate remains a persistent thorn in the side of optimists, and economists expect the situation to worsen before it gets better.

Some forecasts call for the jobless rate to reach nearly 11 percent by year’s end, which would significantly dampen spending by consumers, a critical driver of growth. That has prompted concern that the economy could enter a period of extremely slow growth or even fall into another downturn.

“Businesses are still very cautious,” an economist for IHS Global Insight, Nigel Gault, said. “But the plus for jobs is the fact that the economy is growing and firms need to produce more output.”

The government revised its job loss numbers for November, saying the economy gained 64,000 in that month rather than 4,000. But the numbers in December were much worse than previously stated; the economy lost 150,000 jobs rather than the 85,000 originally reported.

The dissonance between the tepid recovery for the jobs market and robust turnaround for Wall Street has exacerbated populist tensions.

President Obama has sought to persuade the public that his priority is jobs creation, announcing a series of efforts in recent weeks aimed at clamping down on banks and jump-starting the labor market. On Tuesday, Mr. Obama proposed using $30 billion of repaid bailout loans to help community banks increase lending to small businesses.

Many business owners continue to complain that strict lending standards are hampering their access to funds that would allow them to expand.

Kirk K. Meurer, the owner of store in Cleveland that provides furniture to businesses, has frozen the pay of his 30 employees and stopped buying new cars in an effort to trim costs. He has a $250,000 loan, but he said it has been difficult to persuade his bank to lend any more.

“I’m being very frugal with my decisions,” Mr. Meurer said. “For us to hire, we need to see a turn in the economy.”

As of January, 9.3 million Americans remained without work, the Labor Department said. (That number jumped significantly from December because the Labor Department revised its estimates of job losses from April 2008 to March 2009.)

Many more Americans, even those with jobs, are feeling the pinch. The underemployment rate, which counts people who have given up looking for work and those who are working part-time because of a lack of full-time positions, has steadily risen over the past year. In January, it touched 16.5 percent.

NY Times

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