Unemployment Rate Worsens

WASHINGTON-Unemployment worsened to 6.8 percent in October as mass layoffs hit factory and construction workers, the Labor Department said yesterday. A separate report showed the government's chief economic forecasting gauge declining for the first time in eight months.

The double dose of bleak news led analysts to suggest the midyear rebound had been a false start--"a blip on an underlying trend of a very sick economy" in the words of Allen Sinai of the Boston Co.

President Bush pushed the Federal Reserve for a new cut in interest rates in hopes of sparking a revival but also said rates were low enough already that "it's a good time to buy" a house or car.

He said the nation's biggest problem is "the economy [and] that people don't have confidence."

Democrats blamed Bush for not doing enough to help the long-term unemployed.

The economy's spring pickup apparently was "Gulf War-related" --boosted by national euphoria after the victory over Iraq--"and not really an indication that the economy's fundamental problems had been licked," said Robert Dederick, chief economist at the Northern Trust Co.

So weak were the new numbers that analysts expected the Federal Reserve to provide a new round of interest rate cuts. But there was no immediate movement from the central bank, which apparently took a small step on Wednesday by cutting short-term rates that banks charge each other overnight.

Bush, on a fund-raising campaign trip to Texas, indicated he wanted action from the independent Federal Reserve.

"I think we could go down more on rates," he said in an interview with KTRK-TV in Houston.

The jobs report from the Labor Department showed unemployment up one-tenth of a point from September's 6.7 percent, the first increase since it hit a five-year peak of 7 percent in June.

The rate had inched down at the end of the summer, but that improvement was pinned more on statistical flukes than any hiring rally.