Unemployment Hits 9.8%, Job Losses Accelerate

The Labor Department released new figures Friday showing that the economy lost a net total of 263,000 jobs last month, from a downwardly revised 201,000 in August. Unemployment is now at its highest rate since 1983.

Economists were expecting about 180,000 in job losses, according to a survey by Thomson Reuters. The survey was conducted before recent reports, including regional manufacturing surveys, showed more deterioration in employment.

“It’s clearly disappointing, but probably does not indicate that the situation is deteriorating. The issue is whether this is a turn for the worse or just a bump in a trend that is still improving,” Pierre Ellis, senior economist for Decision Economics in New York told Reuters.

“The situation is quite precarious because labor income is certainly declining which is a threat to the upward movement in consumer spending,” according to Ellis.

The number of people out of work for six months or longer jumped to a record 5.4 million, and they now make up almost 36 percent of the unemployed, the Associated Press reported. More than a half-million unemployed people gave up looking for work last month.

Paul Solman recently explored the true picture of unemployment by exploring the stories of those who go uncounted in the nation’s official jobless rate:

“Jobs are nowhere to be found, and this has the potential to put a big stop sign out on the road to economic recovery,” said Bank of Tokyo-Mitsubishi economist Chris Rupkey, reported Dow Jones Newswires.

“The heavy layoffs have stopped, but there are simply no new jobs available, and the harder the jobs are to get, the harder and longer this road to recovery is going to be.”

Since the start of the recession in December 2007, the number of unemployed people has risen by 7.6 million to 15.1 million, the Labor Department reported.

The largest job losses were in construction, manufacturing, retail trade and government, the department said in its report. The service-providing sector, the main source of U.S. jobs, had especially deep cuts in September, losing 147,000 workers. Goods -producing industries also shed 116,000 positions.

The International Monetary Fund’s World Economic Outlook predicts U.S. unemployment will average 10.1 percent in 2010 and said the jobless rate won’t hit 5 percent until 2014, reported the Wall Street Journal.