The likelihood that the U.S. is in a recession appeared to increase Friday, following weeks of hopes that the country might be skirting one.
Unemployment rose sharply and payrolls shrank for the fifth consecutive month. The economy news came on a day that oil surged to record prices, the dollar weakened and the Dow Jones Industrial Average plunged nearly 400 points. The deteriorating job numbers led markets to scale back the odds that the Federal Reserve will boost short-term interest rates this fall to ward off inflation.
The jobless rate posted its largest one-month gain in two decades, rising to 5.5% in May from 5.0% in April, the Labor Department reported Friday. Payrolls, measured by a separate survey, fell by 49,000 jobs last month, bringing the tally of job losses so far this year to 324,000.
The rise in unemployment has been accompanied by higher food and energy prices, pushing up the “misery index” — the sum of the unemployment and inflation rates — to around 9.4, the highest level since the recession of the early 1990s apart from a one-month blip in 2005.
Read it all from the front page of this morning’s Wall Street Journal.