U.S. Jobless Rate Hits 10.2%, Highest in 26 Years
Analysts had predicted fewer jobs to be cut, with early forecasts anticipating the unemployment rate to hit 9.9 percent, up just slightly from September’s 9.8 percent. Just last week, the U.S. economy posted a gain of 3.5 percent for the third quarter, ending a year of contractions, the strongest signal yet that the worst of the recession may be easing. But job creation continues to lag.
“There’s no doubt that the slashing and burning of jobs has abated quite a lot,” Allen L. Sinai, the founder of Decision Economics, a research firm, told the New York Times. “The economy is recovering, but it is a very soft recovery.”
The latest job losses put the unemployment rate at its highest since April 1983. Since the beginning of the recession in December 2007, 8.2 million people have lost jobs.
The highest losses in October came in construction, manufacturing and retail. The health care sector added 29,000 jobs.
“It just shows how uneven the early part of this recovery is, and I think reinforces the fact the cure is going to take a long time,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University.
The underemployment rate, which includes part-time workers, the unemployed and those who have given up looking, hit 17.5 percent in October. Just a year ago, it was 11.1 percent. Those out of work for 27 weeks or more was little changed at 5.6 million people.
“One important point is that the more people stay unemployed, the less they are employable, the more you need to retrain and they need to go back to school,” said Adolfo Laurenti, deputy chief economist of the Chicago-based financial services firm Mesirow Financial. “So, this is becoming potentially a much bigger social problem than the normal up and downs in unemployment that we see during the business cycle.”
On Thursday, Congress voted overwhelmingly to extend jobless benefits to the unemployed for up to 20 weeks. All states will see their benefits extended 14 weeks, and in states where the unemployment rate is higher than 8.5 percent, an additional six weeks of benefits will be available.
With more than a million out of work Americans facing expiration of their benefits in the weeks to come, the consequences of not extending benefits could have had severe rippling effects across the economy.
“With unemployment benefits, people are half as likely to fall into poverty as they would be if they didn’t have these benefits,” explained Christine Owens of the National Employment Project on Thursday’s NewsHour. “So, the consequences for the individuals are huge, but the consequences for local economies are huge, too, because, when that spending dries up, these economies suffer.”
Congress also voted on Thursday to extend an $8,000 first-time, home buyers’ tax credit, and established a $6,500 credit for existing property owners who sell their home and then purchase a new one.
Both moves, Fuller said, set up the residential construction sector for a recovery as early as this spring.
“Manufacturing nails, manufacturing cabinets, manufacturing appliances, the stuff that goes into houses will benefit as construction picks up, and then as the sale of houses, re-sales and new houses continue to improve, that generates demand for retail goods,” Fuller explained. “So these things are all tied together in a sort of a nice way. It won’t save the economy. It won’t make the economy look like its all cured for 18 months, but that’s where it will start.”