Unemployment is at its highest level since 1983, hitting 9.8% last month. The Department of Labor announced that 263,000 jobs were lost. This follows a revised loss of 201,000 jobs in August (lower than first reported). Nobody expected the August unemployment reprieve to last, and the increase suggests that the forecasted 10.3% unemployment rate for early next year will be realized.

Originally, the forecasted unemployment drop for September was 175,000, according to Bloomberg News, with individual economists surveyed reporting in a range of 100,000 to 260,000.

Continue reading Unemployment rate hits 9.8%

Unemployment rate hits 9.8% originally appeared on BloggingStocks on Fri, 02 Oct 2009 10:00:00 EST. Please see our terms for use of feeds.

Economists are scrambling to make sense of the drastic rise in unemployment and what it means for our long term economy. Former Federal Reserve Chairman, Paul Volker is saying that the "natural rate" of unemployment may rise above previous levels. The "natural rate" of unemployment is the rate at which it neither creates acceleration or deceleration in inflation. The previous high for "natural employment" was 5.5%. Now, in current conditions it may rise to 6.5% of even 7%.

This creates several added problems. First, it will cause a general decline in federal revenues which, in turn, will drive up the federal deficit to over $1 trillion. Next, the government will need to decide if they leave the rate of "natural employment" alone of try and stimulate more job growth, thus increasing the chance for higher inflation.

Continue reading What are the effects of long term unemployment?

What are the effects of long term unemployment? originally appeared on BloggingStocks on Mon, 04 May 2009 17:30:00 EST. Please see our terms for use of feeds.