Surging oil prices and rampant unemployment send stocks tumbling.

A summary of what's in the major U.S. newspapers.
June 7 2008 4:12 AM

Double Trouble

Economic doom and gloom is the order of the day, after surging oil prices and a startling jump in the unemployment rate sparked a panicky sell-off on Wall Street. New statistics show that the U.S. economy sloughed 49,000 jobs last month—less than some had expected, but enough to send oil prices through the roof as traders rushed to the spigot in search of safe investments. The New York Timesreports that the turmoil sent stock prices tumbling, with the Dow Jones, the NASDAQ * and the Standard and Poor all falling by about 3 percent; that stoked fears that the United States might still be on course for a full-blown economic slump. "We're in a borderline recession situation by any standard," one economic forecaster told the Los Angeles Times.

The unemployment rate reached 5.5 percent last month, up half a percentage point from April, according to new Labor Department statistics; that marks the fifth consecutive month of decline, and the largest single-month swing in more than two decades. The Washington Postsays that joblessness rose across race and gender, but was mostly fueled by an unusually large surge of teens and young people into the workforce. The Wall Street Journal cautions that April and May are traditionally volatile months for the labor market; still, it notes, the combination of higher unemployment and rising food and energy prices has pushed the "misery index"—the sum of unemployment and inflation rates—to its highest level since the recession of the early 1990s.

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Meanwhile, oil prices shot up by more than $10 yesterday, to more than $138 a barrel; the LAT says the price hike will quickly translate into higher gas prices for motorists. The WSJ says the 8.4 percent price spike is unprecedented, given the uninterrupted flow of oil; it blames the weakening dollar and rising tensions in the Middle East, and notes that oil is replacing gold as the investment opportunity of choice in troubled times. The NYT asks whether commodity traders could find themselves caught in a speculative bubble; senior economists pooh-poohed the notion, blaming the price increases on a "perfect storm" of underlying economic factors.

Hillary Clinton is due to formally halt her presidential campaign and endorse Barack Obama today; the Post and the LAT both report that the Democratic rivals met Thursday at the home of California Sen. Dianne Feinstein to discuss the way forward. The WSJ reveals that Clinton also spoke Thursday to her top 50 fundraisers, asking them to open their wallets for Obama; with the two top Democrats together raising almost five times as much as John McCain during the primary season, that could give the Illinois senator a formidable fundraising edge.

The Post says Obama's extra cash will allow him to campaign in states where Democrats do not traditionally compete—and give him extra latitude to rebound from false steps along the way. The WSJ notes that the Obama campaign seems to have done far more electoral groundwork than the McCain camp, with many more field offices and local campaign teams already in place. Still, the Republicans have a not-so-secret weapon up their sleeve: the party is already running online spots recycling Hillary Clinton's primary-season attacks on her former rival.

Much will also depend, says the NYT, on the degree to which Obama and McCain succeed in  winning over women voters; their task will be made more difficult by concerns about lingering sexism in American politics. Still, there's general agreement that Clinton's candidacy helped raise the glass ceiling: "By the end of those 54 primaries and caucuses, Hillary had made a woman running for president seem normal," writes the NYT's Gail Collins. "It's not the same as winning the White House. But it's a lot."

On the WSJ's op-ed page, meanwhile, Peggy Noonan takes a moment to dance on the grave of Hillary's presidential hopes: "America dodged a bullet," she crows. "Clinton would have been a disaster as president."

Senate Democrats nixed legislation intended to combat global warming yesterday, after failing to win enough votes to overcome a Republican filibuster. The WSJ partly attributes the bill's defeat to record-high gas prices; the NYT and the Post both note that while the climate bill was seen as a test run for a more serious legislative effort in the next Congress, after three and a half days of debate it's still hard to say where a significant number of lawmakers stand on the issue.

Zimbabwean police yesterday detained opposition leader Morgan Tsvangirai for the second time in a week, reports the Post, as President Robert Mugabe sought to strengthen his hand ahead of a crucial runoff election. The LAT reports that Tsvangirai has also been barred from speaking at political rallies—hitherto his main way of circumventing the state-controlled media —and may even be prevented from putting up campaign posters. Foreign aid workers have come under fire, too; the NYT notes that Harare ordered all NGOs to suspend their operations, accusing them of using food aid to "buy votes" for the opposition.

Burma's ruling junta has begun to evict victims of last month's cyclone from their refugee camps, reports the NYT; destitute families are being forced to return to the isolation of their obliterated villages to begin work on "reconstruction". The Post reports that the government also ordered the arrest of Burma's most famous comedian, a dentist known as "Tweezers", who had spearheaded efforts to collect and distribute food and blankets to survivors of the disaster.

Correction, June 9: Because of a copy-editing error, the article previously misspelled NASDAQ. (Return to the corrected sentence.)

Ben Whitford writes for the Guardian, Mother Jones and Newsweek.

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