Unemployment rises to 8.5% in March

The current rate would be even higher - 15.6 percent - if it included laid-off workers who have given up looking for new jobs or have had to settle for part-time work because they can't do any better. That's the highest on record for that number going back to 1994.

"Even if the economy continues to show signs of improvement, businesses will cut jobs and trim fats to stay lean and mean," said Sung Won Sohn, economist at the Martin Smith School of Business at California State University, Channel Islands.

So far, the public has shown great hopes for the economic policies of President Obama. But those could fade quickly with more months of layoffs. In Europe for an economic summit, Obama called yesterday's unemployment report a "stark reminder" of a need for action at home and abroad.

The recession may well end this year - Federal Reserve chairman Ben Bernanke and many private analysts see that possibility - but rehiring historically doesn't get going until after an economic recovery is picking up steam. The jobless rate is expected to reach 10 percent by year-end.

The stock market generally bottoms out before a recovery gets underway, too, and stocks now have risen for four straight weeks.

The Dow Jones industrials rose 39.51 points yesterday after surging 216 points Thursday and closed above 8,000 for the first time in nearly two months.

Small comfort to millions of laid-off workers. The Labor Department report underscored the recession's toll: a spike in the jobless rate from February's 8.1 percent and a net loss of 5.1 million jobs since December 2007, almost two-thirds of them in just the past five months. And economists say an additional 2.4 million jobs will disappear through the first quarter of next year.

As the downturn eats into companies' sales and profits, they are laying off workers and resorting to other cost-saving survival measures that also hit employees, the report showed. Those include holding down hours and freezing or cutting pay.

"It's an ugly report, and April is going to be equally as bad," said Mark Zandi, chief economist at Moody's Economy.com. "I couldn't see any rays of sunshine. Nothing."

The average work week in March dropped to 33.2 hours, a record low. And nearly a quarter of the unemployed have been out of work for six months or more, the highest proportion since the steep 1981-82 recession.

And hundreds of thousands of out-of-work Americans soon will exhaust their unemployment benefits in the coming weeks. Congress extended benefits twice last year to a total of 46 to 59 weeks.

Many who have been lucky enough to keep their jobs are seeing their paychecks shrink.

Average weekly earnings declined to $614.20 in March from $615.05 in February. If earnings keep falling, that would give consumers another reason to pull back spending, which would further weaken the economy.

Yesterday hundreds of people rallied on Wall Street to protest the billions of dollars in federal bailout money to big business.

Monica Moorehead, managing editor of the newspaper Workers World, said the crowd gathered to protest the capitalist system which helps AIG and other companies she said steal money from us.

The crowd was waving signs reading, "No more money for Wall Street."

But there have been some positive economic signs recently. Orders placed with US factories actually rose in February, ending six straight months of declines, the government reported Thursday. This week, there were better-than-expected reports on construction spending and pending home sales.

And last week a report showed consumer spending - the main driver of the economy - rose in February for the second month in a row - after a half-year of declines.