The nation's unemployment rate shot up to 6.4 percent in June, the highest level in more than nine years, in an economic slump that has added nearly a million people to jobless rolls in the past three months.
Businesses slashed 30,000 jobs in June for the fifth straight month, with cuts heavily concentrated in the nation's factories, the Labor Department reported Thursday.
The 0.3 percentage point increase from May's 6.1 percent rate was the largest month-to-month rise since the Sept. 11, 2001 terror attacks. That surprised analysts, who predicted a smaller rise to 6.2 percent. The last time the overall rate was higher was in March 1994.
The poor economy and swelling unemployment could pose problems for President Bush next year in his re-election bid. But tax cuts recently passed by the Republican-controlled Congress are starting to take effect and will bolster job prospects, the administration has argued.
"Its effects will be felt by America's working families, seniors and small business owners later this month, as they begin receiving tax rebates and larger paychecks," said Labor Secretary Elaine Chao. "As this stimulus builds momentum, we expect to see more new jobs created and more out of work Americans receiving a paycheck again."
At the White House, press secretary Ari Fleischer said that while the economy experienced a "short and shallow recession, we are also an economy that is having a slow recovery."
Democrats are determined to make the economy a big issue in next year's elections. "The verdict is in: The Republicans' multi-trillion dollar failed economic policy is one the greatest disasters for working Americans in a decade," said Sen. Jon Corzine, DN.J., chairman of the Democratic Senatorial Campaign Committee.
While recent economic indicators point to an economy struggling toward recovery, the latest report demonstrated that America's job market was still very much in a state of recession last month.
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