US Unemployment rate hits 9.8 %

by Susan Marie Kovalinsky | October 2, 2009 at 07:17 am

681 views | 49 Recommendations | 15 comments

It makes no sense to speak of recovery, when job losses increased in September; and unemployment now hits 9.8%.

For Forbes interactive map of US states' unemployment , go to:

http://www.forbes.com/2009/10/01/unemployment-stripes-map-business-washington-map.html

All the talk of recession ending is confounded by one simple fact: The job market is not recovering. In September, the 22nd month since the recession began, an additional 263,000 jobs were lost, bringing the total number of unemployed to 15.1 million.
The losses were worse than August, when 201,000 jobs were lost, but better than July's 304,000. The unemployment rate rose to 9.8% from 9.7%.

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Vic De Zen

at 09:41 on October 2nd, 2009

They say media never helps with the stimulation of the economy during and after a recession because the negative press could be detrimental to the economy. This could have been a failed attempt at feeding the economy good news in order help stimulate the economy again. As it is, I was pretty pessimistic despite the news of a recovering economy. This is my conspiracy theory two cents.

a211423

at 14:34 on October 2nd, 2009

It's good to hear blame being spread around to previous administrations, instead of dumping it all on the current administration. It's a shame the greater population doesn't see what we are dealing with now has roots going back years.

Rory Cripps

at 15:49 on October 2nd, 2009

a211423: Most voters believe that W. Bush was responsible for the current recession. They get it! One of the problems is that people simply have no idea how the economy works (or doesn't work). The result is that politicians make hay of this fact and use it to their political advantage. This usually occurs in the form of a president proclaiming that his policies ended a recession (or a depression in the case of FDR) or a presidential candidate proclaiming that if he is elected, his policies will end a recession. Politicians have virtually nothing to do with ending recessions. And in most cases, their policies prolong recessions and make things worse for the average person. I have no doubt that fiscal and monetary policies can have a positive effect on an economy and I have no doubt that fiscal and monetary policies can actually prevent recessions (or depressions). But for some reason, our economic institutions, such as the Federal Reserve which was set up almost 100 years ago to prevent severe down turns in the economy such as we're now experiencing, seem to always do the wrong thing. Indeed, the facts are that since the Federal Reserve was established, America has experienced more macro economic instability, and increasingly prolonged recessions and unemployment than before its establishment. I wonder why that is . . . .

nanute

at 02:24 on October 3rd, 2009

Rory,

The primary reason for the establishment of the Fed, in 1913, was to prevent runs on the banking system. Some economists will argue that the Fed was responsible for the Great Depression, and there is some evidence to support this premise. Remember, the US has a fractional reserve banking system. Like it or not, the Fed was set up to insulate the money supply from political expediency, and control by Wall St. Unfortunately, this latest round of near collapse of the financial system required the Fed to prop up the "too big to fail" banks and other key financial entities. There are some people that are of the mindset that says we should have just let the weaker institutions fail. (That's the way the capitalist system is supposed to function.) The problem with this thinking, in my opinion, is that allowing Citi, BOA, JP Morgan, etc. to fail, would have led to a run on the banks, that would have made the 29' panic look like a walk in the park. The biggest mistake that the Fed made in this current situation, is the fact that very little, if any, restrictions were placed on the bailed out institutions. The average Joe on the street is hopping made that taxpayer dollars are in essence rewarding bad behavior without any consequences. Unless some serious banking and investment reforms are enacted, the corporations (moneyed class), will have effectively taken over control of the system.

Rory Cripps

at 06:42 on October 3rd, 2009

nanute: The bottom line is that the Fed was ostensibly established to prevent severe down turns in the economy through it's monetary policies. If there's no stability in the monetary system, then there's no stability in the overall economic system. If there's a run on banks (such as the Fed allowed out the outbreak of the Great Depression with the Bank of the United States in New York) then the credit markets dry up, businesses can't function, and the economy goes into a recession or worse. Look at how the FED's tentacles have expanded:

The Federal Reserve System (also known as the Federal Reserve, and informally as the Fed) is the central banking system of the United States. It was created in 1913 by the enactment of the Federal Reserve Act, largely as a response to a series of financial panics or bank runs, particularly a severe panic in 1907.[1][2][3] Over time, the roles and responsibilities of the Federal Reserve System have expanded and its structure has evolved.[2][4] Events such as the Great Depression were some of the major factors leading to changes in the system.[5] Its duties today, according to official Federal Reserve documentation, fall into four general areas:[6]

Conducting the nation's monetary policy by influencing the monetary and credit conditions in the economy in pursuit of maximum employment, stable prices, and moderate long-term interest rates.

Supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers.

Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.

Providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation's payments system.

Current functions of the Federal Reserve System include:[6][31]

To address the problem of banking panics

To serve as the central bank for the United States

To strike a balance between private interests of banks and the centralized responsibility of government

To supervise and regulate banking institutions

To protect the credit rights of consumers

To manage the nation's money supply through monetary policy to achieve the sometimes-conflicting goals of

maximum employment

stable prices, including prevention of either inflation or deflation [32]

moderate long-term interest rates

To maintain the stability of the financial system and contain systemic risk in financial markets

To provide financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

To facilitate the exchange of payments among regions

To respond to local liquidity needs

To strengthen U.S. standing in the world economy

nanute

at 08:24 on October 3rd, 2009

Rory,

I'm not sure what your arguing here. Are you in favor of abolishing the Fed? If so, how would you propose to keep the banking and financial markets stable in times of crises? I can't imagine what shape the US economy would be in right now, if the Fed was non-existent. Don't get me wrong, I am not saying that the Fed system is the perfect answer. Until we can come up with a better solution, it's all we've got.

You are correct with the assertion that the failure of the Fed to act in 29' was a mistake of catastrophic consequence. Keep in mind, this failure to increase the money supply and lower interest rates was an ideological/political argument. The Hoover administration was of the opinion that it was perfectly acceptable to bail out the corporations, while the notion that helping out distressed farmers and unemployed citizens was seen as "making people soft."

The similarities to the current fiscal crisis are eerily similar, with the exception of the fact that the Fed increased the money supply this time around. Help for the little guy on the street without a job and no ability to pay his mortgage doesn't seem to be getting much traction from the government, and the general public. Granted, the Obama administration has tried to implement some policies to stem the rate of foreclosure. The problem is that the lenders are not being pressured heavily enough to make a difference. It is again a political "game" being played at the expense of the very people that can least afford the entry fee.

Rory Cripps

at 10:11 on October 3rd, 2009

nanute: I think that "Old Hickory" (Andrew Jackson) had the right idea! Thanks for turning me on to the book BTW. Now look what you went and did! JEEZ! I agree with Roy C--the FED needs to open its books. What's with all the secrecy? Once they do that, then I think that we can have a more productive debate re the efficacy of the FED. That will never happen though because there's too many skeletons in the FED's closet. Take a read of Secrets Of The Temple by William Greider . . . .

If the Federal Reserve Bank proved to be effective and did what it was supposed to do, I probably wouldn't have a problem with it.My point about the Fed is that there's very little evidence to suggest that it's an effective institution. If it were, then why have there been so many recessions?

Craig Miller (not verified)

at 14:43 on October 2nd, 2009

I agree unemployment rate has never been an accurate indicator to measure the status of economy. Craig <a href="www.tradeviewforex.com/open-forex-trading-account.aspx/">free online trading</a>

a211423

at 16:28 on October 2nd, 2009

Rory

I know the Federal Reserve is your pet peeve, and there is the tendency to want to blame someone or something. But despite the cyclical nature of our economy, we are one of the richest countries in the world, so some of our institutions must be doing something right.

We discussed the cycles of regulation and deregulation and how the ideology of the Democrats and Republicans have effected the level of government intervention, which does--like it or not--effect the way businesses conduct themselves and directly influences economics. The cycle now is to bring back regulations so business will once again be reined in.

One of the purposes of the Federal Reserve system is supervising and regulating banking institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers. I would not be willing to disband any systems that attempt to protect consumers, and we don't have anything better right now to take its place.

Rory Cripps

at 17:31 on October 2nd, 2009

a211423: I have no pet peeves when it comes to matters of economics. I make a sincere an earnest effort to ascertain the facts and to therefore be completely and totally objective. Moreover, I think that it's an extremely dangerous thing for anyone to place their faith and trust in any government institution. And I think that it's even more dangerous for anyone to place their faith and trust in any politician or political party. I simply stand by the historical and economic fact that the Federal Reserve has had more failures than successes. I urge everyone that's interested in why the American economy does what it does to read as many books on the history of the American economy as they can. The Federal Reserve was never set up to "protect the credit rights of consumers". It was set up as a consequence and under the pretext of one particular "bank panic" a few years prior and as an "emergency banking institution. It was set up as a monetary institution entrusted with "tweaking" the nation's money supply in order to smooth out business cycles (i.e. recessions) and to prevent economic devastation such as occurred in the Great Depression less than two decades subsequent to its establishment. There is very little convincing evidence that the Federal Reserve has done any of this. The closest that the Fed has come to being perceived as carrying out its stated function was back in the Carter years when inflation was in the double-digits. Again: The facts are that prior to the establishment of the Federal Reserve, the longevity and severity of America's economic downturns were less than what America has experienced subsequent to the establishment of the Federal Reserve.

tarina1984

at 18:49 on October 2nd, 2009

White Trash with disposable income have destroyed America's economic system . . .an economic system that, at one point, had the potential to virtually eliminate most poverty throughout America. To one that has to scrounge links of london for his or her next meal and worry about whether or not a roof will be over his or her head in the coming days, the American "free market system" is an abject failure . . . .

Rory Cripps

at 19:13 on October 2nd, 2009

And another New Yorker has popped up on the site! Imagine that!

White Trash with disposable income have destroyed America's economic system . . .

YES! I believe it with all my heart!

a211423

at 19:25 on October 2nd, 2009

Rory,

I know you are libertarian, and your views are consistent with Libertanianism.

At least you stand by your beliefs, even if I don't agree with them.

Rory Cripps

at 14:00 on October 3rd, 2009

a211423: JEEZ! I'm not a libertarian! Ask nanute! LOL! The only thing that I'm a libertarian on is the first and second amendments to the U.S. Constitution. If the Federal Reserve Bank proved to be effective and did what it was supposed to do, I probably wouldn't have a problem with it.My point about the Fed is that there's very little evidence to suggest that it's an effective institution. If it were, then why have there been so many recessions? Look at the functions that the Fed serves in my above comment to nanute. It's not as if the Fed was hamstrung in implementing its monetary policies. The Federal Reserve Bank is more than semi autonomous and can pretty much do what it wants to do in affecting monetary policy.