Jobless Rate Soars Above 10 Percent, Highest in 26 Years

Nov. 6, 2009— -- The nation's unemployment rate soared in October to 10.2 percent, the highest rate since 1983, the government announced Friday.

The nation's employers shed 190,000 jobs from their payrolls over the last month, the Bureau of Labor Statistics said this morning, bringing the total number of jobs lost since the recession started to 7.3 million.

October marked the 22nd month in a row of job cuts as the country has dealt with the worst recession since the Great Depression. There were 15.7 million Americans who sought work last month but were unable to find any.

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While unemployment is a lagging indicator, Friday's report was more discouraging than had been expected. Most forecasters had predicted approximately 175,000 jobs lost during October, with the unemployment rate rising to 9.9 percent. The actual numbers turned out to be far worse.

Still, there were some encouraging signs, such as positive revisions for job losses in August and September, as well as an increase in overall wages and temporary hiring.

"[The] turn in the labor market is evident -- do expect job gains in 2010,"John Silvia, chief economist at Wells Fargo. The nation's economic recovery, he said, is "still in place, just less than the hypothetical 'V'-shaped recovery."

"Remember, the unemployment rate is a lagging indicator and as such it lags the business cycle," Silvia said.

But there were also certain improvements that economists had hoped to see that ultimately did not materialize, such as an increase in hours worked each week.

The psychological impact of a double-digit unemployment rate could also weigh on consumers' minds as the crucial holiday season approaches. Retail sales numbers have improved in recent months, but consumer confidence could be damaged by today's numbers. Because consumer spending accounts for around 70 percent of overall economic growth, if consumers opt not to open up their wallets, that could have a negative effect on the country's recovery.