10.2% Unemployment Rate, a Real Sign of Weakness
Jason Barlow Cunningham
November 13, 2009
Most economists had expected the nation´s unemployment report to reveal further weakness in the job sector, prior to the release of the report on November 6, 2009. However, the 10.2% unemployment rate caught many people by surprise.
According to the Labor Bureau of Statistics, the U.S. unemployment rate increased from 9.8% in September 2009 to 10.2% in October 2009. The October unemployment rate is this nation´s highest level since 1983. Nevertheless, in this internet age, in which Microsoft has grown into a large cap company, who could have predicted a nationwide double digit unemployment rate at the beginning of 2009? It is time to panic.
In spite of the 3rd quarter GDP growth of 3.5%, the current double digit unemployment rate could spell doom for any long term U.S. economic recovery. Many workers fear further job cuts. Some companies are now more inclined to give workers a pink slip than a 4% raise. Unfortunately for the U.S. economy, many consumers are not buying products or services at the same level as they once did. Without strong consumer spending, businesses have no incentive to create new jobs or to invest in technology. Therefore, do not be stunned if the 4th quarter GDP suffers because of the increased unemployment rate. This means another U.S. recession could be looming.
The Obama administration must act now, even if some frown upon government intervention. The business community has failed to create enough stable jobs to keep the unemployment rate below 5%. Unfortunately, how can the current Administration encourage businesses to hire people in this economy? Many businesses are struggling just to make their weekly payrolls because additional credit is not readily available to them. In addition, many businesses are waiting for the outcome of Congressional health care reform. Meanwhile, the government will have to create more jobs in the near term and provide more tax incentives to persuade businesses to increase their workforce.
A stellar stock market performance in the 4th quarter may not be enough to improve the job outlook for 2010. However, a great Holiday shopping season could be the catalyst to stabilize the job market. Otherwise, if the upcoming Holiday shopping season does not meet or exceed analysts´ expectations, the unemployment rate is likely to rise in 2010.
According to the Labor Bureau of Statistics, the U.S. unemployment rate increased from 9.8% in September 2009 to 10.2% in October 2009. The October unemployment rate is this nation´s highest level since 1983. Nevertheless, in this internet age, in which Microsoft has grown into a large cap company, who could have predicted a nationwide double digit unemployment rate at the beginning of 2009? It is time to panic.
In spite of the 3rd quarter GDP growth of 3.5%, the current double digit unemployment rate could spell doom for any long term U.S. economic recovery. Many workers fear further job cuts. Some companies are now more inclined to give workers a pink slip than a 4% raise. Unfortunately for the U.S. economy, many consumers are not buying products or services at the same level as they once did. Without strong consumer spending, businesses have no incentive to create new jobs or to invest in technology. Therefore, do not be stunned if the 4th quarter GDP suffers because of the increased unemployment rate. This means another U.S. recession could be looming.
The Obama administration must act now, even if some frown upon government intervention. The business community has failed to create enough stable jobs to keep the unemployment rate below 5%. Unfortunately, how can the current Administration encourage businesses to hire people in this economy? Many businesses are struggling just to make their weekly payrolls because additional credit is not readily available to them. In addition, many businesses are waiting for the outcome of Congressional health care reform. Meanwhile, the government will have to create more jobs in the near term and provide more tax incentives to persuade businesses to increase their workforce.
A stellar stock market performance in the 4th quarter may not be enough to improve the job outlook for 2010. However, a great Holiday shopping season could be the catalyst to stabilize the job market. Otherwise, if the upcoming Holiday shopping season does not meet or exceed analysts´ expectations, the unemployment rate is likely to rise in 2010.
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