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Jobless Rate Tops 10% – Unexpectedly

From a perpetually surprised Associated Press:

Jobless rate tops 10 pct. for first time since ’83

By Christopher S. Rugaber, AP Economics Writer

WASHINGTON – The unemployment rate has surpassed 10 percent for the first time since 1983 — and is likely to go higher.

Nearly 16 million people can’t find jobs even though the worst recession since the Great Depression has apparently ended. Many economists worry that persistently high unemployment could undermine the recovery by restraining consumer spending, which accounts for 70 percent of the economy.

The Labor Department said Friday that jobless rate rose to 10.2 percent, the highest since April 1983, from 9.8 percent in September. The economy shed a net total of 190,000 jobs in October, less than the downwardly revised 219,000 lost in September, but more than economists expected.

The jump in the jobless rate reflects a sharp increase in the tally of unemployed Americans, which rose to 15.7 million from 15.1 million. The net loss of jobs occurred across most industries, from manufacturing and construction to retail and financial…

Economists say the unemployment rate could climb as high as 10.5 percent next year because employers remain reluctant to hire.

Counting those who have settled for part-time jobs or stopped looking for work, the unemployment rate would be 17.5 percent, the highest on records dating from 1994…

But the Associated Press won’t let us get down.

For immediately upon the heels of this report and seconds after the New York Stock Exchange had opened, they cheerfully reported:

Stocks rise as traders shrug off unemployment

By Sara Lepro And Tim Paradis, AP Business Writer

NEW YORK – Stocks rose early Friday as investors shrugged off news that more jobs were lost in October than expected, pushing the unemployment rate above 10 percent for the first time since 1983.

The rise in joblessness reassured some investors that the Federal Reserve will have to hold interest rates lower for some time. That weakened demand for the dollar, which gave a boost to stocks.

Safe-haven assets like Treasurys were mixed. Oil prices plunged and gold topped $1,100 an ounce for the first time…

So you see, there is nothing to worry about.

The recovery is going strong.

This article was posted by Steve on Friday, November 6th, 2009. Comments are currently closed.

7 Responses to “Jobless Rate Tops 10% – Unexpectedly”

  1. proreason says:

    “The recovery is going strong.”

    And it is.

    Soros and Goldman Sachs have doubled their wealth since last year.

    You know the common wisdom is to buy low and sell high.

    What you didn’t know is that if you have bought the politicians to cover your tracks, you can make it go high and low when you want it to.

  2. Rusty Shackleford says:

    And of course, the real number is closer to 18% since there are those who aren’t on the radar of the system. Part-timers, those who have given up looking and whose UE benefits have stopped.

    Hope and Change…..yuppers.

    Happy days are hear again…..the skies above are clear again…..let us sing a song of cheer again…..

    History repeats itself again. *sigh*

  3. crosspatch says:

    Folks need to understand that this wasn’t a typical business cycle recession. What is hamstringing business is that it is practically impossible to borrow money as the financial companies build reserves to cover mortgages which they left uncovered for a long time.

    What this downturn is more about is a wholesale destruction of wealth. In 1929 we saw everyone and their brother in the markets, there was a market panic, market nosedived, and there was a huge destruction of wealth. People who had millions of dollars on paper now had nothing.

    What we have now is a similar situation with housing. People had, on paper, hundreds of thousands of dollars of equity. People around here were refinancing every year or so and yanking another $100K of equity out every time. Now they own a house that is worth much less than they owe on it.

    So while there might not be anything fundamentally wrong with corporations, they can’t borrow to expand. They can’t borrow to import (you generally need a line of credit for the value of the goods you are importing before the exporter will ship it. They need to be assured the product will be paid for when it arrives). They can’t borrow to bridge the spread between goods shipped and payment receipt (accounts receivable loans).

    Companies whose goods are bought primarily by Americans with disposable income (RV manufacturers, car manufacturers, furniture companies, home improvement contractors) are finding that nobody is buying anymore. Companies who export or make necessities are doing better.

    We had no major hurricanes or other disasters this year to inject billions into construction. We had some major fires in Southern California and lost some homes but it burned mostly wild lands.

    Folks, there isn’t going to be an “easy” turnaround here. There isn’t anything the government can do to replace that massive destruction of wealth that happened to millions of homeowners in this country. Even if they cut a check to every homeowner for the difference between what they owe and what their home is worth for people with upside down mortgages, it won’t replace the inflation of home values that was happening month after month in the bubble years. They would have to issue such checks to people every month to replace that and it isn’t going to happen. It can’t.

    There is a fundamental change in wealth in the hands of the people. In their zeal to provide home ownership to the “underprivileged” and give them a shot at creating their own wealth, they have destroyed it for everyone.

    There is only one way to turn things around and that is to create wealth the old fashioned way … start and grow small businesses.

    My proposal:

    1. Eliminate federal income tax for sole proprietors for gross income under $1 million/year.
    2. Eliminate federal income tax for proceeds of S corporations up to $1 million/year.
    3. Combine 1 and 2 for a maximum of $1 million.

    What this does is allows an unemployed tradesman to go into business for himself. His income will be tax free up to the $1 million gross. A hairdresser could go into business for herself, free of federal income tax. A mechanic could go into business, etc. Basically it encourages the unemployed to form legitimate businesses rather than work “under the table”.

    4. Provide low interest or interest-free small business loans to sole proprietors and businesses having fewer than 10 employees.

    5. Require labor unions to pay income tax on union dues and other income.

    Basically the notion is that you create wealth by starting and/or growing a business. You don’t create wealth from buying something and sitting on it while its value becomes artificially inflated. It encourages people to be in business for themselves.

    A lot of small businesses out there were being financed directly or indirectly through home equity. People were either taking equity out of their homes to put into their businesses or they were providing good and/or services that were being paid for from customers taking equity out of their homes. The housing deflation has devastated small business.

    All of this, or course, runs counter to the Democrats plan. They would rather have everyone working for the government or huge corporations so that they can be more efficiently “managed”. Having millions of small businesses making millions of independent decisions and doing things a million different ways scares the hell out of them because they (the Democrats) become “cat herders” at that point.

    • proreason says:

      We have had our disagreements in the past crosspatch, but you are spot on with your analysis and your recommendations.

      I would add that the government also needs to immediately divest itself of private business ownership and commit to regulating itself AT LEAST as strenuously as private business, since the government is 100% responsible for the situation we are in.

      But as you know, the common sense solutions you have proposed are posited on the assumption that the people in power actually want the economy to rebound and the country to regain its strength and power.

      The opposite is true.

      The people in power are delighted with the situation. They will be throwing fuel on the fire soon, probably in the form of a massive new “stimulus”, which will merely be another vehicle to steal more from us and redistribute that current and future wealth to their co-conspirators.

      The ONLY solution to the problem is to throw the criminals out of office. This is extremely urgent because they are currently devoting 100% of their efforts to measure that will prevent exactly that.

    • crosspatch says:

      Every unemployed person is a potential freelancer. Each one is a potential sole proprietor no matter what they do. They might not be able to find employment as a regular employee but there might be someone or some company that could use their talent on a contract basis for a project. We need to get people back into the notion that they can be the master of their own destiny. They aren’t reliant on someone else “giving” them a job and telling them what to do. They are quite capable of doing what they do on their own. Giving a little extra incentive in these times for people to bootstrap themselves into that situation would be good for the entire country.

      The problem is getting people into the mindset that they CAN do things on their own. So government putting down a “yellow brick road” in that direction might be required on a temporary basis to get them headed in that direction. A license to do business under your own name generally costs less than $100 in most counties in this country and in many counties it is less than $20. There is no reason for people not to engage in private enterprise on their own if they have some talent, skill or experience. Heck, you could charge $100 an hour just to be on a conference call as a consultant if a business is engaged in a project that you have experience in and they want the benefit of your experience to avoid problems that they don’t know about but you have seen before.

      It really is that simple. You just have to remember to properly report the income and pay the taxes on it. There is nothing that prevents people from doing business on their own. It is employing people that is the real pain.

  4. bill says:

    According to the BLS the real rate of unemployment is 17.5% , chart A12, line item U6 from the BLS press release here http://assets.bizjournals.com/cms_media/pittsburgh/Oct-unemploymt.pdf. So why the funny business with the numbers, the public long ago got wind of the lies.

    It’s curious that all the economic news is ‘unexpectedly’ bad, I guess this happens when you try and force Amercia to be a Soviet style crappile.

    The real problem right now, is no one believs Obama, they are all staying out of stores, buying on necessities, no more. Means there are essentially no customers.

    The stock market is where people are trying to hedge against the enevitable — INFLATION.

    BTW: Japan Inc tried the zero percent thing, when their sociailist economy went for the crapper … didn’t work for them, and they are still in their.

    • proreason says:

      It’s worse than that.

      BLS can only capture people who have at some time filed for unemployment payments.

      The 17.5% doesn’t include:

      – People who were self-employed and cannot file for unemployment
      – Seniors who need to get back in the workforce but can’t
      – Mothers who now need to get back in the workforce but can’t
      – People who have less work now than they need to support themselves (underemployed people)
      – The 200,000+ young people each month who are entering the workforce but never get on the radar because they can’t get that first job (one year of that equals 1.5% unemployment)
      – People who could file for unemployment but don’t for some reason (maybe they go back to school and don’t want to adhere to the rules to collect unexmployment benefits)

      True unemployment is certainly higher than 20%.

      But the good news is that Health Care jobs have increased 600K since the beginning of 2008. That can only get better with the government in charge of your toothpaste, can’t it?

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