Jobless Rate Tops 10 Percent in 15 States, DC

Fifteen states have crossed a painful threshold: 10 percent unemployment. More states, and the nation, likely will follow, one of the biggest dangers to an economic recovery.

In this file photo, job seekers look over job opening fliers at the WorkSource exhibit, a...

In this file photo, job seekers look over job opening fliers at the WorkSource exhibit, a collaborative effort by governmental agencies to offer jobs and job training resources at the Greater Los Angeles Career Expo at the Pasadena Convention Center on May 14, 2009 in Pasadena, California.

(David McNew/Getty Images)

How consumers behave in the face of rising unemployment will figure prominently in shaping a broader rebound. If they go back into hibernation and sharply cut spending like they did at the end of last year, the recovery could cave in. More likely is that consumers will stay cautious, making for a fragile and slow-moving national economic turnaround, economists said.

The Labor Department on Friday said unemployment topped 10 percent in 15 states and the District of Columbia last month. And the jobless rate in Michigan surpassed 15 percent, the first time any state hit that mark since 1984.

The Federal Reserve this week projected that the national unemployment rate, currently at a 26-year high of 9.5 percent, will pass 10 percent by the end of the year. Most Fed policymakers said it could take "five or six years" for the economy and the labor market to get back on a path of long-term health.

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"With so much uncertainty, companies will stay in cost-cutting mode and consumers will watch their spending," said Steve Cochrane, managing director at Moody's Economy.com.

The news was not all bad. North Dakota, helped by the oil business, reported the lowest unemployment rate of 4.2 percent in June. It was followed by Nebraska at 5 percent and South Dakota at 5.1 percent, supported by farm businesses. None of those states ever got carried away with the housing boom, either, so their residents didn't suffer as big a hit to household wealth.

Still, the state unemployment report underscored the damage that the longest recession since World War II has inflicted on companies, workers and communities, and the challenges the economy faces getting back on its feet.

A common theme running through states suffering from high unemployment was heavy layoffs tied to the troubled auto industry and the collapse of the housing market. Workers in manufacturing, construction, retail and finance have been the hardest hit.