Unemployment Rate Hits 6.5% in October

The unemployemnt rate in the US has really taken off. The rate was 5% in April, 5.5% in May and is now 6.5%. Also it looks like the US economy lost about 1.2 million jobs this year. We are already worse than the unemployment rate in the 2001 recession and we are beginning to rival the recessions in the 1970s and early 1980s. Don't be surprised to see an unemployment rate in excess of 8% this time next year. Text in bold is my emphasis. The BLS press release makes for interesting reading. The following is from Market Watch:

The U.S. labor market has collapsed in the past three months, shedding 651,000 jobs and driving the unemployment rate to its highest point in more than 14 years, the Labor Department reported Friday.

U.S. nonfarm payrolls fell by 240,000 in October, worse than expected. Payrolls losses in September were revised down sharply to 284,000, the largest job loss in seven years.

Unemployment surged by 603,000 in October to 10.1 million, the highest level in 25 years, according to a survey of households. In the past six months, unemployment has leaped by 2.45 million, the largest increase since 1975.

"A stumbling economy seems to have been kicked down the stairs," said Lawrence Mishel, president of the Economic Policy Institute. "This is what a deep recession looks like."
So far in 2008, a total of 1.18 million jobs have been lost, according to the survey of work sites. Payrolls have fallen for 10 straight months.

The last time the unemployment rate was as high as 6.5% was in March 1994. Most economists believe the jobless rate will probably rise to nearly 8% next year, territory last seen in the early 1980s.

"While the labor market is already in its worst condition since 2001, we expect it to weaken further," wrote Harm Bandholz, economist for UniCredit Markets.

Already, the jobless rate has risen by 1.5 percentage points over the past six months, the steepest climb since 1982.

The number of workers forced into part-time hours rose by 645,000 in October to 6.7 million.
An alternative gauge of unemployment -- which includes discouraged workers and those whose hours have been cut back to part-time -- rose to 11.8%, the highest in at least 15 years. . . .

The discouraging report added to selling pressure on Wall Street, although stock indexes were higher after the two worst back-to-back days ever. Treasury prices fell while the dollar weakened.

Weak income growth implied by the report "will likely further depress already grim expectations for the holiday shopping season," wrote Richard Moody, chief economist for Mission . . .

. . . . Job losses were deep and widespread across industries, according to the survey of work sites. Of 274 industries, only 37.6% were hiring in October, the lowest since June 2003. The brightest spot continued to be health-care, which added 26,000 jobs in October. Government added 23,000 jobs. . . .

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