Commentary

Faux-Recovery: Unemployment Hits 10.2 Percent

Unemployment continued to rise in October, a sign that the highly touted recovery isn’t all the administration and Wall Street would like us to believe. From Reuters via Yahoo! finance:

The U.S. jobless rate unexpectedly jumped to a 26-1/2-year high of 10.2 percent last month, adding to pressure on the Obama administration to do more to tackle unemployment even as signs of recovery mount.

The Labor Department said on Friday that employers cut 190,000 jobs in October, more than the 175,000 markets had expected but fewer than the 219,000 lost in September.

Economists had been predicting a rise to around 9.9% from September’s 9.8%. But the percentages are worse than that, hitting the highest percentage we’ve seen in over a quarter of a century. While actual number of jobs lost is less than last month, there is a greater number of Americans out of work. That speaks negatively about the reality of economic recovery. Again, from Reuters:

“Unfortunately, the problem is becoming deeper and more protracted,” Mohamed El-Erian, chief executive of bond giant Pacific Investment Management told Reuters. “It’s not just the increase in the headline number. … It’s also about the longer-term nature of unemployment, the increase in underemployment, and the prospect for only a very gradual recovery.”

Even with the stock market up from its low in March, and positive GDP growth in the 3rd quarter this year, recovery in the real economy is anything but thriving. GDP growth in the third quarter was based largely on government subsides, not stable earnings. Wall Street has come back on confidence that the big boys will be bailed out if necessary by the Obama administration. But there are still severe problems in the housing market, and those problems are keeping the banking industry down as well.

The government needs to tout a recovery for political purposes. Wall Street would like us to think there is a robust recovery so we’ll buy stocks. But unemployment numbers like these don’t speak of real recovery, only the continuation of economic problems:

Unemployment Percentages from the Past Year

  • October-08 | 6.5%
  • November-08 | 6.7%
  • December-08 | 7.2%
  • January-09 | 7.6%
  • February-09 | 8.1%
  • March-09 | 8.5%
  • April-09 | 8.9%
  • May-09 | 9.4%
  • June-09 | 9.5%
  • July-09 | 9.4%
  • August-09 | 9.7%
  • September-09 | 9.8%
  • October-09 | 10.2%

Source: Bureau of Labor Statistics

Anthony Randazzo

Anthony Randazzo is a senior fellow at Reason Foundation, a nonprofit think tank advancing free minds and free markets.