Unemployment: Even Worse than the Headlines

Posted on Friday, October 2, 2009

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FT Alphaville reports:

Employers cut more jobs than forecast in September, sending the unemployment rate to 9.8 per cent — the highest since 1983 — compared with 9.7 in August.
Data released on Friday by the Labor Department in Washington showed US payrolls fell by 260,000, while the numbers for August were revised to a decline of 201,000. The revisions subtracted 13,000 from payroll figures previously reported for August and July.
Economists polled by Bloomberg had forecast a drop of 175,000 in September after a 216,000 decline initially reported for August. Estimates ranged from decreases of 260,000 to 100,000, Bloomberg said. Economists polled by Reuters expected a loss of 183,500 jobs and an unemployment rate of 9.8 per cent.

Unfortunately, it was even worse than that. The chart below shows that the headline 9.8% unemployment figure would have been even worse had the number of those 'not in labor force' not spiked (the unemployment rate is a measure of unemployment / labor force).