NEW YORK (
) -- On Friday, the Labor Department gave the bad news: The nation's unemployment rate hit a 26-year high in October, while nonfarm payrolls were slashed by a slightly larger-than-expected 190,000.
While the street consensus had forecast a more subtle rise to 9.9% from September's 9.8%, many public and private sector economists anticipated the rate to top 10% before year end. Despite a smattering of recent positive-sounding economic figures highlighting a recovery, jobless numbers are the proverbial "lagging indicator" and many realize that the job market would get worse before it gets better.
Still, the headline -- unemployment rate at 10.2% -- is utterly disappointing, though not all-together surprising to our readers. A vast majority, about 82%, of readers of
who took a poll posted before the release of the labor report, believed that the unemployment rate would top 10% during the month.
Looking ahead shows our users to be even more pessimistic about the future of the unemployment rate. A separate poll -- posted immediately after the 10.2% rate was announced -- showed that more than 16% of users anticipate the rate to stay about the threshold for more than 2 years, with almost 27% of users saying the expect the rate to stay above 10% for between 12 and 24 months. The greatest proportion of respondents -- almost 34% -- see the rate staying above 10% for between 6 to 12 months. A mere 3% see the rate falling below 10% within 2 months, followed by the 2% who see it coming back to single digits after only one month.
Those fears are not unfounded. Just see some of the employer names that have littered reports and headlines with job cut news in recent days and weeks:
( JAVA) and
One reader left a comment, questioning how job growth is even going to get jump-started. "I do not see any major drivers making companies hire more people," says a commentor with the handle TOMBROCKS. "Industrial activities are still at a low and in the service sector one can squeeze out of the existing workforce more because of the fear factor."
That reader might be on to something. Before releasing the jobs report, on Thursday the Labor Department boosted market sentiment with news that productivity jumped by a whopping annual rate at 9.5% in the third quarter. In other words, the report hinted that firms have already figured out how to slash payrolls, cut costs, and do more with less, fueling the anguish of the nation's jobless recovery.
By the end of the day on Friday, the markets had largely shrugged off the 10.2% rate, instead focusing on more positive cues like the better-than-expected downward revisions in payroll cuts for August and September. In fact, all three major indices ended higher on Friday, with the
closing above 10,000 for the second straight day.
Even more discouraging, when accounting for all those who stopped looking for work or are underemployed, the so-called real unemployment rate hit a massive 17.5%.
-- Written by Sung Moss in New York
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