On paper, the worst recession in 70 years came to an end in the third quarter of 2009. On the streets, things are as bad as ever. Unemployment rose from 9.8% to 10.2% in October, the U.S. Bureau of Labor Statistics reported on Friday.
The economy lost 190,000 jobs in last month. So, on the bright side we’ve “only” been losing an average of 188,000 jobs per month for the past three months, compared to an average of 357,000 jobs per month for the three months before that.
Wall Street sees progress: Stocks went up on Friday. Financial journalists said it was because everyone was so upbeat about only losing 190,000 jobs. But averages can be misleading. October’s numbers still represent the biggest payroll drop in four months.
One economist says that unemployment could ultimately surpass 13%. “This is going to be the mother of all jobless recoveries,” David Rosenberg, chief economist at Gluskin Sheff & Associates Inc., told Bloomberg Radio.
The unemployment rate for African Americans is already 15.7%, and even higher than that for African-American men.
If you define the terms, you win the argument. Economists define a recession as a contraction in the size of the economy lasting at least two consecutive quarters. The current recession was declared over because the economy grew for the first time in over a year — Americans produced 3.5% more goods and services in the third quarter of 2009 than we did in the second.
In other words, the recession is over because the economy grew for the first time in a year.
This isn’t sustainable. Growth without jobs is a mirage. The growth in the third quarter was fueled by construction and consumer spending. A third of the jobs lost in October — 62,000 of them — were in construction.
Consumer spending also helped boost economic growth last quarter. But how can those gains continue unless consumers can earn a good living and feel secure enough in their own jobs to spend money?
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