Unexpectedly large job cutbacks by struggling retailers and manufacturers kept the U.S. unemployment rate at an eight-year high of 6 percent in December, reflecting an economy still suffering from an uneven recovery and tepid consumer and business spending.
Although the national economy has shown signs of improvement recently, the Labor Department's report Friday indicated there was a net loss of 101,000 jobs last month. November payrolls also were revised sharply lower to a drop of 88,000.
Analysts said these figures provided evidence that the nation still was contending with a "jobless recovery" and marked the first time in five decades that the United States has weathered two straight years of job losses. Since January 2001, the economy has lost 1.6 million jobs, the majority in high-tech and manufacturing.
December's gloomy job picture bodes ill for consumer confidence and increases the possibility that Americans could curtail their spending, which would make it harder for the economy to pull out of its slump.
"I'm still optimistic that this year will be better than the last, but it's certainly starting out with no positive momentum, which is not a good feeling," said Bill Cheney, chief economist for John Hancock Financial Services in Boston.
Investors are betting that these bleak employment numbers will help President Bush push through some version of his $674 billion plan to boost the economy, which the Democrats have attacked as a giveaway for the wealthy.
White House spokesman Ari Fleischer told reporters that the December jobless numbers were "another reason why Democrats and Republicans need to join together (to pass the president's proposal)." The Bush administration claims its plan, which includes income tax cuts and the elimination of taxes on stock dividends, will help create 2.1 million jobs over three years.
Analysts attributed the surprisingly dismal employment report -- a small payroll increase was expected last month -- on weak holiday hiring, lagging consumer confidence and uncertainty about the impact of tensions with Iraq and North Korea.