US unemployment hits two-year high

January 4, 2008

Unemployment in the United States rose sharply last month and government figures released late Friday show the number of new jobs was at its lowest level in four years. President Bush is considering more tax cuts in an effort to boost the nation's sagging economy.

American unemployment rose to five percent last month, the highest rate since 2005 and new employment statistics released Friday show the U.S. economy added only 18,000 new jobs in December, far fewer than most economists expected.

"This economy of ours is on a solid foundation, but we can't take economic growth for granted, and there are signs that will cause us to be ever more diligent and make sure good policies come out of Washington," he said.

The president says consumer spending is still strong and core inflation is low, but home values are declining and gasoline and food prices are rising.

Mr. Bush warned opposition Democrats in Congress against raising taxes, saying that is the worst thing lawmakers could do. But he did urge them to pass legislation that could help more Americans refinance their homes.

"When Congress comes back, I look forward to working with them to deal with the economic realities of the moment and to ensure the American people that we will do everything we can to make sure we remain a prosperous country," he added.

The ongoing financial crisis over adjustable-rate mortgages continues to affect the overall economy and not just home sales. There has been a cut in jobs in the building industry and the Labor Department report also shows a drop in factory jobs.

President Bush is considering an economic stimulus package that could include more tax cuts. In a Thursday interview with the Reuters news service, Mr. Bush said he and his economic team are considering all their options and he probably will not decide whether to act until his State of the Union Address later this month.

Democratic Senator Charles Schumer is urging the president to take action to avoid what the lawmaker says could be the economy tumbling into recession.