Overcast Start to October: Jobs Data Cloud Recovery

From the Wall Street Journal | Oct 3, 2009

Employers cut another 263,000 jobs in September and the unemployment
rate rose to a 26-year high of 9.8%, raising worries that the
persistently weak labor market could undermine a nascent economic
recovery from the worst U.S. recession since the Great Depression.

The
economy, by most accounts, has begun to grow again. But Friday's Labor
Department report underscored the risk that without jobs, consumers
won't have income to spend and that will restrain growth and give
employers little reason to resume hiring after 21 consecutive months of
job losses.

The bleak report comes amid continuing talks between the White House
and Congress on extending of some parts of the stimulus package enacted
in February, such as unemployment benefits and health-insurance
subsidies.

"The pace of the recovery is likely to slow," said Nigel Gault,
chief U.S. economist for research firm IHS Global Insight. "Ultimately,
if we don't get job growth, we're not going to get sustained growth in
consumer spending. How could we get a really strong recovery without
consumers?"

With
the economy propped up by government spending on programs such as "cash
for clunkers," economists worry the fragile recovery will fizzle if
employers don't soon begin hiring. Programs such as extensions of
unemployment benefits to the $8,000 tax credit for first-time
homebuyers have helped stabilize the housing market and construction
spending. Manufacturing output has begun to rebound as companies look
to rebuild inventories, while companies have used productivity gains to
regain profits.

But hiring hasn't followed.

The number of unemployed -- officially at 15.1 million -- is greater
than the population of all but four states. The proportion of people
who have been searching for work for longer than half a year rose to
35.6% of the unemployed, from a third of the work force in August. The
dismal state of the job market led to a decline of 571,000 in the labor
force, a sign that discouraged workers have given up looking for work
entirely.

Investors signaled concern that the economy isn't recovering as
steadily as many had hoped. The Dow Jones Industrial Average fell 21
points, or 0.2%, to 9487.67.

A separate report Friday showed more disappointing news: Factory
orders fell 0.8% in August from a month earlier, after four months of
increases.

Write to Conor Dougherty at conor.dougherty@wsj.com

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  Real Time Econ: Broader Jobless Rate Hits 17%
  

Podcast

Economist John Canally of LPL Financial
discusses the report showing the unemployment rate climbed to 9.8%.