Jobless rate is highest in five years

605,000 positions lost since January

The US unemployment rate jumped to 6.1 percent in August, its highest level in five years, pushing the troubles of American workers to the center of the political debate as the presidential campaign enters its final weeks.

For the eighth consecutive month, the nation's employers shed jobs - 84,000 last month, the Bureau of Labor Statistics reported yesterday. In all, 605,000 jobs have been lost since January. The steady rise in unemployment, from 5.7 percent in July and 5 percent in April, is one that many economists associate with recession.

Both presidential candidates - Senators Barack Obama and John McCain - said through spokesmen that they would favor an economic stimulus package from Congress this fall.

Even though the economy continued to expand in the first half of the year, tell-tale signs of a recession - either in progress or soon to strike - are spreading. Consumers have curtailed spending, the housing market continues to deteriorate, banks are reluctant to lend, consumer confidence is slipping, and European and Asian economies are slowing, depriving the United States of a lift from abroad.

"The mood of the country as far as the economy is concerned is depressed," said Nigel Gault, chief domestic economist for Global Insight, "and that is what it should be."

The last stimulus package pumped more than $160 billion into the economy, mostly in the form of tax rebate checks distributed in the spring and early summer to tens of millions of Americans.

"That stimulus did not jump start a recovery, which was the hope when it was passed," said Mark Zandi, chief economist at Moody's Economy.com and an economic adviser to McCain. "And so here we are again talking about another stimulus package, right in the middle of an election campaign."

McCain's advisers said that while he favors using tax incentives to stimulate the economy, he would consider something similar to the last stimulus package, an advantage being that Congress might approve it quickly.

The Obama camp urged Congress to enact the $50 billion stimulus package that the senator recently proposed. Most of the money would go to states and cities, "so they don't have to cut back on healthcare and education and can rebuild roads and schools," Obama said in a statement.

In their response to this latest employment report, the two candidates appeared to be emphasizing what they would do to give the economy a quick lift, while pushing into the background, at least for the moment, their longer-term economic proposals. The monthly employment report registers widely with voters, and the candidates' call for another stimulus package appears to reflect not only their concern about the jump in unemployment in August, but the likelihood that the September report, due out on Oct. 3, will be just as dreary.

Apart from the 84,000 jobs lost in August, the bureau yesterday revised its original estimates for June and July, saying that an additional 58,000 jobs had disappeared in those months. Nearly all represented cutbacks by state and local governments struggling with lower tax revenues in a weakening economy.

The economy expanded in the second quarter at a healthy annual rate of 3.3 percent, a response in part to families spending their rebate checks from the first stimulus package and to a surge in exports as the dollar weakened. Now the dollar is rising, the last of the stimulus checks were mailed weeks ago, and the credit crisis - particularly the reluctance of banks and other financial institutions to lend to consumers and businesses alike - is restricting economic activity.

Given these pressures, many economists expect third-quarter growth to be barely positive. In any case, the government is not scheduled to announce the third-quarter number until late October, just days before the election.

The August jobs report seemed to suggest that the deterioration in the economy is accelerating. The unemployment rate has risen 1.4 percentage points over the last year and is now at its highest level since September 2003, when the economy was just beginning to emerge from a jobless recovery.

Michael M. Grynbaum of The New York Times contributed to this report.