Oil Prices Skyrocket, Largest Unemployment Increase in 22 Years

On same day, oil prices had biggest single-day hike, U.S. lost 49,000 jobs.

ByABC News via logo
June 7, 2008, 1:16 PM

June 7, 2008 -- More grim economic news for the United States: Oil prices made their biggest single-day leap ever on Friday. And new numbers show the country's unemployment rate is at its highest in years.

Oil skyrocked to $138.54 a barrel yesterday, up nearly 45-percent from the same time last year. The news came in the wake of a report by top investment firm Morgan Stanley that predicted oil could soar to $150 by July.

With employers worried about a sharp slowdown and their own prospects, they clamped down on hiring in May, said Friday's report from the Labor Department, according to The Associated Press.

Unemployment jumped to 5.5 percent, the largest one-month increase in unemployment in 22 years. Economists had predicted the unemployment rate would rise from 5.0 to 5.1 percent. From April to May, Americans lost nearly 49,000 jobs, making it the fifth consecutive month of job losses.

The numbers also weighed heavily on the stock market. News of the oil prices and job losses sent the stock market into a tailspin. The Dow Jones Industrial dropped nearly 400 points on Friday.

The White House said President Bush was considering further plans to help energize the economy, already teetering on the edge of recession and crippled by a tumbling housing market and other factors.

The reasons for the price increase and job loss vary, from a weak dollar, price speculation, increased demand and geopolitical tensions. Regardless, jobs and oil remain two of the most important issues on Americans' minds.

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The Associated Press contributed to this report.