Unemployment Rate Drops To Lowest Level in 6 Years; Clinton Hails Report; Some Economists See Inflation Threat
With the nation's economy running hotter than expected this summer, the jobless rate dropped to a six-year low of 5.3 percent last month and employers added nearly a quarter-million workers to their payrolls, the Labor Department reported yesterday.</br></br>The surprisingly strong jobs numbers, coupled with a sharp rise in hourly wages for the month, were applauded by the White House as a sign of buoyant economic growth.</br></br>"We have the most solid American economy in a generation, and it's good news when America can have high job growth, strong investment and low inflation," President Clinton told reporters. Ten million payroll jobs have been added since he took office.</br></br>Investors, who can be alarmed by economic news that they consider too good, took a dimmer view of the labor report. Fearful that the unrelenting strong growth would cause the Federal Reserve to raise short-term interest rates as early as next week to keep the economy from overheating, investors launched a selling spree in yesterday's holiday-shortened trading session, sending stocks and bonds sharply lower.</br></br>The Dow Jones average of 30 industrial stocks dropped 114.88 points, or slightly more than 2 percent, to close at 5588.14. Meanwhile, yields on 30-year U.S. Treasury bonds, which rise when bond prices fall, shot up by a quarter of a percentage point to 7.18 percent, the highest level in more than a year.