WASHINGTON
The unemployment rate has hit double digits for the first time since 1983 -- and is likely to go higher.
The 10.2 percent jobless rate for October shows how weak the economy remains even though it is growing. The rising jobless rate could threaten the recovery if it saps consumers' confidence and makes them more cautious about spending as the holiday season approaches.
The October unemployment rate -- reflecting nearly 16 million jobless people -- jumped from 9.8 percent in September, the Labor Department said yesterday. The job losses occurred across most industries, from manufacturing and construction to retail and financial.
Economists say that the unemployment rate could surpass 10.5 percent next year because employers are reluctant to hire.
President Obama called the new jobs report another illustration of why much more work is needed to spur business creation and consumer spending. Noting legislation that he is signing to provide additional unemployment benefits for laid-off workers, Obama said, "I will not rest until all Americans who want work can find work."
The government's monthly unemployment report is based on two surveys, one of households and one of companies' payrolls. The household survey showed that about 558,000 more people were unemployed last month than in September, raising the total to 15.7 million. The company survey, however, showed only a third as many job losses -- 190,000.
The disparity can be explained by the fact that the company survey doesn't count people who are self-employed and undercounts employees of small businesses.
That's why some analysts, such as Diane Swonk, that chief economist at Mesirow Financial, say that last month's household survey could be an ominous sign for the economy.
Troubles for small businesses could have a disproportionate effect on the economy, because they account for about 60 percent of the nation's jobs. They tend to rely on credit cards and home-equity lines to maintain their cash flow. Banks have tightened credit in many of these areas.
The 10.2 percent unemployment rate does not include people without jobs who have stopped looking for work or those who have settled for part-time jobs. If you counted those people, the unemployment rate would be 17.5 percent, the highest on records dating from 1994.
"It's not a good report," said Dan Greenhaus, the chief economic strategist for Miller Tabak & Co., an investment firm in New York. "What we're seeing is a validation of the idea that a jobless recovery is perfectly on track."
Last week, the government said that the economy grew at a 3.5 percent annual rate in the July-September quarter, the strongest signal yet that the worst recession since the Great Depression is over. But that growth isn't fast enough to turn the job market around.
The economy soared by nearly 8 percent in 1983 after a steep recession, lowering the jobless rate by 2.5 percentage points that year.
But the economy is unlikely to improve that fast this time, as consumers remain cautious and tight credit hinders businesses. In fact, many analysts expect economic growth to moderate early next year, as the effects of government stimulus programs to increase home and car buying fade.
Despite the rise in joblessness, the stock markets were little changed yesterday afternoon. The bleak jobs report reassured investors that the Federal Reserve won't raise record-low interest rates any time soon. The prospect of continued low rates tends to lead investors to shift money into stocks.
High unemployment is likely to become a political liability for Obama and Democrats in Congress. Most economists expect the jobless rate will remain above 9 percent through next November, when congressional elections are held.
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