Unemployment Rate Hits 9.8% in September

Employers Cut 263,000 Jobs, More Than Expected

(CBS/AP)  Last Updated at 3:42 p.m. Eastern

The unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected.

The report shows that the worst recession since the 1930s is still inflicting widespread pain and underscores one of the biggest threats to the nascent economic recovery: that consumers, worried about job losses and stagnant wages, will restrain spending. Consumer spending accounts for about 70 percent of the nation's economy.

President Barack Obama called the latest jobless figures a "sobering reminder" that the nation's economic recovery has a way to go.

Most analysts expect the economy to continue to improve, but at a slow, uneven pace. Government stimulus efforts, such as the Cash for Clunkers auto rebates, likely boosted the economy in the July-September quarter, but economists worry that growth will slow once the impact of such programs fades.

"Consumers ... are going to struggle to increase their income," said Brian Fabbri, North American chief economist for BNP Paribas. "If they're struggling, they're not consuming. That just takes some of the legs out of recovery."

The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, from a downwardly revised 201,000 in August. That's worse than Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters.

The unemployment rate rose from 9.7 percent in August, matching expectations.

If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent, the highest on records dating from 1994.

All told, 15.1 million Americans are now out of work, the department said. And 7.2 million jobs have been eliminated since the recession began in December 2007.

The stock market was down modestly in afternoon trading. The Dow Jones industrial average dipped about 5 points, and broader indices also edged down.

The department said 571,000 of the unemployed dropped out of the work force last month, presumably out of frustration over the lack of jobs. That sent the participation rate, or the percentage of the population either working or looking for work, to a 23-year low.

The unemployment rate would have topped 10 percent if the labor force hadn't shrank, Fabbri said.

Older, laid-off workers are dropping out and requesting Social Security at a faster-than-expected pace, according to government officials. The Social Security Administration said earlier this week that applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent.

Meanwhile, 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 - also a record.

Persistent joblessness could pose political problems for Mr. Obama, who pushed through an ambitious $787 billion stimulus package in February intended to "save or create" 3.5 million jobs by the end of 2010.

"We still think the overall trend is moving in the right direction," said Christina Romer, chair of the President's Council of Economic Advisers. "We're going from much larger job losses earlier this year. They are moderating. We want them to moderate more."

Republicans note that job losses have continued despite the stimulus. "Wasteful government spending is not the solution to what ails this economy," said Indiana Rep. Mike Pence, chairman of the House Republican caucus.

Federal Reserve Chairman Ben Bernanke said Thursday that even if the economy were to grow at a 3 percent pace in the coming quarters, it would not be enough to quickly drive down the unemployment rate. Bernanke said the rate is likely to remain above 9 percent through the end of 2010.

Besides the sagging jobs market, other potential obstacles to a smooth recovery include wary consumers, the troubled commercial real estate market, and a tight lending environment for individuals and businesses, said Eric Rosengren, president of the Federal Reserve Bank of Boston.

"These challenges will likely make the recovery rather restrained by historical standards, with subdued levels of spending and lending continuing to hold back a more rapid recovery," Rosengren said in a speech in Boston on Friday.

Against that backdrop, key monetary and fiscal policy supports will need to be keep in place to help foster a recovery, Rosengren said.

Hourly earnings rose by a penny last month, while weekly wages fell $1.54 to $616.11, according to the government data.

The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are looking for companies to add more hours for current workers before they hire new ones.

The uncertainty that surrounds the recovery has made employers reluctant to hire. The Business Roundtable, a group of CEOs from large corporations, said earlier this week that only 13 percent of its members expect to increase hiring over the next six months.

While job losses have slowed since the first quarter of this year when they averaged 691,000 a month, the cuts actually worsened last month in many sectors compared with August.

Construction jobs fell by 64,000, more than the 60,000 eliminated in August. And service sector companies cut 147,000 jobs, more than double the 69,000 in the previous month. Retailers lost 38,500 jobs, compared to less than 9,000 in August.

Government jobs fell 53,000, the report said, with local governments cutting the most.

One the bright side, temporary help agencies eliminated only 1,700 jobs, down from the previous month. Economists see temporary jobs as a leading indicator, as employers are likely to hire temp workers before permanent ones.

Tig Gilliam, CEO of Adecco North America, a temporary job agency, said the industry likely will add jobs next month.

According to a separate report Friday, U.S. factory orders fell in August by the largest amount in five months.

The Commerce Department said demand for manufactured goods dropped 0.8 percent, much worse than the 0.7 percent gain that economists had expected. The August decline reflected plunging demand for commercial aircraft, a category that surged in July.

[ZiggyNoPants]

Not to rain on everyone's parade here bashing both the Democrats and the Republicans but I would like to say that they both suck. The two party system has broken down and is grinding to a screeching halt.

Bush passed a massive spending bill at the end of his administration and that was bad enough. The Fed Chairman he appointed was a crook, and Greenspan has come out and said Maybe Deregulation was a bad idea. Good going W.

But this cult of personality Chicago thug will spend more on welfare in the next year than W spent on the war during his administration. That's welfare alone kids not all the other trillions (yeah that is a T) of dollars he has promised to all the shadowy organizations that helped get him in the White House. To all the intelligent liberals I want to ask you one question. What has he accomplished so far other than ramming said stimulus package down our throats? The only thing I can figure is he won the election everything else is a big failure.

[G-I_Jesus]

Tiger Woods: The First $1B Athlete

Mr. Woods,

If you gave one dollar each to the poorest people on the planet you would get back one billion smiles.

[Stevenapoli7]

We need a libertarian president to restore order. Tax, spend, tree hugging democrats and borrow, spend, militray hawk republicans are ruining the country.

[cs4466]

How much money are we spending on Iraq and Afghanistan right now? Why? Time to redirect our tax funds and put them to use here at home where we need them instead of meaningless wars in foreign countries.

[missyfive]

As long as corporate America continues to ship jobs to India and China, unemployment will continue to remain high. Obama said we would approach 10% back in November 2008 and we are on track. Between jobs being shipped overseas, H1-B foreign workers still being hired and illegals working construction jobs, a jobless recovery is certainly possible. Hello Congress? Is anyone listening? What do the American people need to do to get Congress' attention on the outsourcing of jobs?

[vietnamwar]

GOOD JOB PRESIDENT AND THE DUMACRAFT.

WASHINGTON (AFP) ? Pakistani Foreign Minister Shah Mehmood Qureshi welcomed a giant US aid package for his country, voicing hope that alleviating poverty would erode support for extremism.

Congress on Wednesday gave the final go-ahead for a five-year, 7.5-billion-dollar package to build schools, roads and democratic institutions in the Islamic nuclear power, which re-established civilian rule last year.

Qureshi, who is holding talks in Washington next week, on Friday voiced appreciation for the package, acknowledging that the United States was allocating the money despite a struggling economy at home.

[vietnamwar]

Dimacraft are clueless,paid me then I can help.

[pvperson3]

And unemployment will go past 10%, economists have been saying that for a year, employment is ALWAYS the last thing to improve after a recession, always has been and will be. Also, your making things up "rational_1", noone ever said that the stimulus would keep unemployment below 8%, NOBODY.

[kevjustice]

This is the result of the collapse of the economy which in turn is the result of the deregulation of the economy. Ronald Reagan started this and reaganomics and Republican(mostly) policy has been proven to be a disaster.

[bravotex]

Republi-crats and Demo-cans...they are playing us all. How anyone can say that one is better than the other is naive at best. The leadership in both parties tilt towards socialism and globalism. One more obvious than the other...that's on purpose. It's easy to see. Which direction has America gone in the last 100 years? Left of course. Nobody with a rational mind can argue that it has shifted to the right. So you tell me, where is the difference. The single greatest mistake that our Founding Fathers made was...not including term limits for the congress and Presidency from the start. Without term limits the congress has turned into gangsterism. Any congressman with more than 2 terms under their belt is bought and paid for by big business on both sides of the aisle. Everyone on here making comments in favor of one side or the other must first remove the stick from their own eye to clearly see the whole truth of the matter. Sheeple every one last of you.

[donbl1]

Obama is doing about as well with fixing the economy as he did in Copenhagen.

Yes, Obama inherited a recession. It happens.

HOWEVER, our President said he knew how to fix it.

And, he will be graded on that effort. I hope he is spending more than the 25 minutes he spent with General McCyrstal on the Afghanistan war that Obama said was the just war and he had a plan.... Maybe the plan was to call in ACORN.

[gboyd41]

In my opinion, companies are not going to hire because they are afraid of a huge corporate tax increase. This administration needs money,in a bad way. Who has the money?-corporations. Thus, there will be minimal hiring until the POTOS declares his intensions.

[gboyd41]

Good job, our elected officials. Keep printing the $ 24/7.

[dragon8me]

The under-employerd should be counted in some way as well. The reason so many companies hire so many part-time workers is because they don't have to pay benifits and they get a break for having more employees. The government likes it because it the work at all they don't have to count them as unemployed making the economy look better than it really is.

[czhnder]

by Lawyers-Guns-n-Money-01 October 2, 2009 4:18 PM EDT
Except for that last part. If McCain were to have been elected, we'd still be in the same predicament we find ourselves in today. Maybe even worse because the Republican plan would have been to let the corporate hegemony that got us here in the first place be responsible for solving the crisis.

Actually, it was us that got US into this mess... it's called greed over wanting all the toys credit can buy! But most liberals would rather be victims of someone else than responsible...

[Lawyers-Guns-n-Money-01]

Yeah, the average consumer had a part to play in this mess but the 'US' you refer to isn't as narrow as just the U.S. 'US'.

Buying EVERYTHING on credit with little or nothing down. But the wide-eyed connivers of the financial and real estate industries, in their infinite wisdom, inflated the worth of EVERYTHING. They then gambled on these already bad practices by chopping, cutting, dicing and slicing worthless paper and selling it like it was mana from heaven. Of course, a lot of finacial corporate carpetbaggers had the impression that some of this stuff could go south but took advantage of an aenemic regulatory system. Everybody was fooled! I mean, whos's going to trust your company if it's not rated triple-A? The problem is, when it came to getting rated, they could shop their wears around the government to find the path of least resistence to secure a favorable rating.

Enter AIG. "Hey, you guys are a triple-A rated company so we only need to secure a small portion of the garbage you've been hawking all over the world." Of course, AIG went out and hawked THIS bad paper as an sure investment. These companies were buying insurance, and AIG turns around and invests it into the same toxic garbage their insuring, which means more insurance money, which means more money to invest in the garbage...

[joule18]

How's that stimulus working for you? I'm talking about both the first and the second. The first was distributed under GWB and the rest is administered under Obama.

The grants for the rebuilding of the energy grid has been postponed several times and now put on indefinite hold. I'm sure other proposed grants have been too. I'm beginning to think it's all smoke and mirrors when it comes to real jobs and more about paying back supporters.

[veteran71]

Let's get back to massive tax-cuts for Corporations and the Wealthiest 1%.....that worked out so well during the Shrub/Darth years.......Oh,....wait a minute,.....those tax cuts haven't been repealed yet and those who made Galactic Profits while regular people went broke are making even MORE money......let's get another War for Profit cranked up again while we're at it, and escalate that bottomless pit in Afghanicluster......hey, it worked out so well for the Russians......

[czhnder]

Oh, yeh! The recession's over! Obama has saved us!

[salmoc44]

Everything would be better if the guy who knew the fundamentals of our economy were strong and that Americans are whiners had become President. More Bush-like tax cuts and another war would have saved the day.

[stuart-johns1]

Hey Marc,


You are making a moot point here, as they don't even use these people when they report the unemployment rate most commonly used. It's just another statistic to show that there is 'hidden' unemployment out there.
====================

LMAO!!! YOU made that "moot" POINT! Not me! You republicsans just get zanier by the day. The article said "and if you include those who are working part-time..." And I responded by saying that was a dumb statement as those people who are employed, albeit part-time, are not eligible for unemployment as they are working!

What is so hard about reading for you republican sheeple?? NONE of us in America can understand why you all cannot read!!

And then you totally switch around what I said. Again, I never made a point except what I said. Now how was my point moot????

Please. I am in the mood for some comedy. Amuse me with an intelligent answer if you can muster one up!


Geeeeesh

[Marc_1986]

@stuart

...

My point was that there is a hidden unemployment that we tend to ignore. Was it really that hard to understand what I was getting at?

[stuart-johns1]

Why did'nt you write what you meant???