A job seeker picks up a copy of the Washington Job Guide at a job fair in Washington, D.C.JASON REED
The Great Recession hit another grim milestone.
More than one out of every 10 Americans in the work force is now unemployed, as the jobless rate jumped to 10.2 per cent in October from 9.8 per cent in September.
It's the first breach of the 10-per-cent mark in more than 26 years.
The last time unemployment was this bad was early 1983, when Michael Jackson was just a rising star, McDonald's was deep frying its first McNugget and Microsoft was rolling out its Word software.
U.S. President Barack Obama, echoing many economists, said the latest job figures confirm the climb out of recession will be hard and unusually slow.
The unemployment rate is a "sobering number that underscores the economic challenges that lie ahead," Mr. Obama told reporters at the White House.
And the rate is likely to climb higher still before it crests, later this year or in early 2010, economists said.
Americans are continuing to lose jobs at an alarming rate - another 190,000 jobs vanished last month. Some 7.3 million U.S. jobs have been lost since the recession began in late 2007.
Consumers make up roughly 70 per cent of the economy, but as Americans clamp down on spending and reduce debt, they're in no shape to drive an economic rebound.
"This recovery is unlike any other we have seen in U.S. history because it is the first recovery that is not consumer-driven," pointed out economic analyst Francis Fong of Toronto-Dominion Bank in Toronto.
Mr. Fong explained in a report yesterday that the financial crisis sets this recession apart from the five before it dating back to 1960. The crisis wiped $1.6-trillion (U.S.) from the balance sheet of financial institutions, impaired credit flows and ravaged household wealth. That means consumers either can't borrow to make purchases, or they won't borrow until they feel more financially secure.
And that could mean the recovery could be jobless for a while yet.
That's bad news for Jason McKinnon, a 34-year-old from San Francisco who lost his $18-an-hour job in April as a video-game software analyst. He said he has sent out hundreds of résumés to companies such as Facebook Inc. and Sony Corp., and received about 50 responses but no offers.
"I'm feeling like there's less jobs out there, and more qualified people," said Mr. McKinnon, who's now returning to college to improve his job prospects.
The U.S. last week reported third-quarter economic expansion of 3.5 per cent, ending a string of four quarters of contraction. But few are counting on strong growth ahead.
"The most recently available [gross domestic product]figures may be pointing to a U.S. economy that is on the mend, but according to the latest employment numbers, the recession lives on," CIBC economist Meny Grauman said. "The labour market currently stands as the single most significant risk to the nascent economic recovery."
Within the first year of recovery, the U.S. economy typically expands two to three times the rate of what it lost while in recession, TD's Mr. Fong said. If that pattern was repeated this time, the economy would grow at a rate of 7 to 10 per cent in the second half of this year and into 2010.
TD's economists, like most other forecasters, are not expecting anywhere near that amount of growth. They expect the economy will expand at a rate of less than 3 per cent for the next few quarters.
For now, what's driving the recovery is the U.S. Federal Reserve, which is flooding the financial system with easy money and massive spending by governments. "The economy may be out of the intensive care unit, but it is hardly healthy," said Bill Cheney at MFC Global Investment Management in Boston. It's "still loaded up on $1-trillion in Fed meds." Without sustained jobs growth, the economy remains susceptible to "substantial relapse," Mr. Cheney said.
In spite of all that, there were a few hopeful signs in October. Job losses have now declined for three straight months. And at 190,000 in October, the losses are a far cry from depth of the recession in January, when the economy shed 750,000 jobs.
And several economists highlighted the fact that one leading indicator of the job market is growing - temporary help services. They were up 34,000 in October.
Coming out of a recession, gun-shy employers are typically reluctant to hire new workers until they are convinced that business is coming back strongly. So before hiring people full-time, they use temp workers and more overtime to handle any increase in business. "If history is any guide, this could flag a very modest increase in employment at the turn of the year," said BMO Nesbitt Burns economist Sal Guatieri.
One of the most sobering facts to emerge from the employment data is that the average length of unemployment is now at a record of nearly 30 weeks.
With files from Bloomberg News