Jobless Rate Suggests Recovery Isn't Near --- Unemployment Hits 5.7% Economists Predict Fed Will Cut Rates Again
The U.S. economy might not be getting back on its feet quite as quickly as some investors have come to believe.</br></br>The unemployment rate jumped to 5.7% in November, its highest level in more than six years, the Labor Department said Friday. Employers cut payrolls by 331,000 on a seasonally adjusted basis, taking steam out of some economists' predictions that the U.S. economy had begun to crawl out of recession.</br></br>Those predictions have helped to fuel a rally in the stock market, but the market lost ground Friday in the face of the bearish economic data, which was one of the first full glimpses of how the economy fared in November.</br></br>Economists said the jobs report removed any lingering doubts that the Federal Reserve will reduce interest rates for the 11th time in the past 12 months when it meets tomorrow.</br></br>"We're still in a recession and the door is still open to easing monetary policy," said Richard Berner, Morgan Stanley's chief U.S. economist. He, like many others, expects the Fed to reduce the benchmark federal-funds rate by one quarter of a percentage point to 1.75%, its lowest level since 1961.