5.8 percent jobless rate highest since 1995

Associated Press

WASHINGTON — The nation’s unemployment rate climbed to a six-year high of 5.8 percent in December as businesses slashed payrolls for a fifth straight month. It was the longest stretch of job losses in a decade as the economy continued to falter in recession.

The economy lost more jobs last year than in any other in the past two decades, but December’s 124,000 job losses were sharply below the previous two months, the Labor Department reported Friday. That raised hopes that the economy could be stabilizing after the terrorist attacks.

"It’s as if we’re sliding downhill in the dark," said Bill Cheney, chief economist with John Hancock Financial Services. "We’re on a more gentle slope now, so we hope that we’re at or near the bottom. But we really can’t tell yet."

Stocks were up somewhat Friday. The Dow Jones industrial average was up 68 points, and the Nasdaq index 15 in afternoon trading.

The employment report provided fresh fuel for political debate.

The administration tried to increase pressure on Senate Democrats to take up President Bush’s economic stimulus program — now called the "economic security" package — when Congress returns this month.

Democrats say the package needs to offer fewer tax cuts for the wealthy and more direct help for thousands of people out of work. Republicans counter that the tax cuts are needed to spur job creation.

"The most important thing that we can do for dislocated workers is to help them find a new job," said Labor Secretary Elaine Chao. "The best thing that we can do for them is not to help them remain on unemployment insurance."

The unemployment report showed that businesses cut 1.08 million jobs from their payrolls in 2001 — the largest single-year loss since 1982 , when 2.16 million were cut as the country struggled through the steepest downturn since the Great Depression.

Last year’s was the first annual job loss since businesses trimmed 844,000 jobs during the last recession in 1991.

The 10-year-long economic expansion that followed — the longest in U.S. history — pushed the jobless rate down to a 30-year low of 3.9 percent in October 2000.