Tuesday, October 6, 2009

Unemployment rate is highest in 26 years

Unemployment rate is highest in 26 years

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The nation's unemployment rate ticked up to 9.8 percent in September, its highest level in 26 years, as employers hastened their pace of layoffs, the government reported Friday in a worse-than-expected jobs report that was sure to quash any notion that the economic downturn is over.

Employers shed 263,000 jobs in September, a much worse showing than the 150,000 or so lost jobs that mainstream economic forecasters had expected.

Emphasizing just how disappointing Friday's report was, the average workweek for production and nonsupervisory jobs fell slightly to 33 hours in September. That number should be going up in an economic recovery.

The numbers were a reality check for anyone who was thinking that strong economic growth was just around the corner.

"I think you've got an economic recovery, but I think the pace of recovery is very disappointing relative to what a lot of people expected," said John Silvia, the chief economist for Wachovia, a large national bank based in Charlotte, N.C.

The jobs report was sure to call the Obama administration's economic stimulus efforts into question, since government hiring fell by 53,000 jobs. The administration and some economists, such as Silvia, maintain that this number would be worse if not for the stimulus efforts.

The figure deflects criticism that the administration is creating a massive government work force, however.

Appearing on CNBC television, Labor Secretary Hilda Solis tried to put a positive spin on the report, noting that jobs are disappearing at a slower pace than they were earlier in the year.

"We're at about the same rate (of job losses that) we saw in the last two months," Solis said, adding that it's a "struggle" to create jobs amid the worst economic climate in decades.

Coupled with poor consumer-confidence numbers earlier in the week, the jobs report added to a grim start to the fourth quarter on Wall Street. After closing down more than 200 points Thursday, the Dow Jones Industrial Average opened down more than 70 points Friday in the first 15 minutes of trading.

In a reflection of concerns that economic growth may be anemic, oil prices also fell almost $2 a barrel Friday morning in trading on the New York Mercantile Exchange.

The Labor Department's report included important revisions. Employers shed 201,000 jobs in August, according to the revisions, not the 216,000 first reported last month. While that was good news, it emphasized how bad September's numbers were, since 62,000 more jobs were lost in September than in August. The Bureau of Labor Statistics also said that 304,000 jobs were shed in July, not the 276,000 first reported.

Since the recession began in December 2007, the number of unemployed Americans has risen from 7.6 million to 15.1 million. The unemployment rate has doubled to 9.8 percent - the highest since June 1983 - up another tenth of a percentage point in September.

While Friday's numbers added to a number of indicators that suggest economic growth remains elusive, there was another important development in the Labor Department numbers that shows the economy is crawling back from a deeper hole than first envisioned.

The BLS revised March employment numbers, saying that the 663,000 job losses first reported for the turbulent month were wildly low. Statisticians now think that 824,000 jobs were lost that month, a difference of six-tenths of a percentage point, a whopping miss in mathematical terms.

This March revision "shows the huge hole we have been thrown into" as an economy, said Lawrence Mishel, the president of the Economic Policy Institute, a liberal policy-research organization.

"The good news is that the employment decline, down 263,000, is still far below the awful hemorrhaging in the winter months," Mishel said.

Amid expectations that the recession finally may be over, however, the jobs report Friday suggests that Federal Reserve Chairman Ben Bernanke was correct late last month when he warned that it will take a long time before many Americans feel as if recovery is afoot.

That's evident in the statistics for the long-term unemployed, people jobless for 27 weeks or longer. In September, 35.6 percent of the 15.1 million unemployed Americans - about 5.4 million people - hadn't had jobs for half a year or longer.

"Today's report is evidence that we have a truly massive crisis of long-term unemployment on our hands, especially now that jobless workers are using up the last of their unemployment benefits," Christine Owens, the executive director of the National Employment Law Project, an advocacy group for the unemployed, said in a statement. "Today's employment report is a marching order for Congress to pass unemployment benefit extensions to all states, quickly."

SEPTEMBER EMPLOYMENT BY SECTOR:

-Construction, fell by 64,000.

-Manufacturing, down 51,000.

-Retail, off 39,000.

-Professional and business services, negative by 8,000.

-Transportation and warehousing, unchanged.

-Financial services, unchanged.

-Health care, plus 19,000.

-Government, down 53,000.

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