Twenty percent true unemployment in 2010?

On October 9th I posted a blog about how it might take 4 years to get unemployment back to normal. I referred to a Wall Street Journal survey of 48 economists which shows that on average these economist believed that the official unemployment rate would peak at 10.2% in February of 2010. They were half right.

The Department of Labor released the October unemployment numbers and the official unemployment rate is now at 10.2% (a 26 year high) while the true unemployment rate (including the unemployed who have not actively looked for a job in the last four weeks and those who want a full-time job but took a part-time job because it was all they could find) is now at an astonishing 17.5%.

15.7 million people are out of full time work of which 35.6% (5.6 million) have been unemployed for more than 6 months. The job market will remain highly competitive for years to come.

If economist believed that 10.2 would be the peak of unemployment and wouldn’t happen until February of 2010 what does that mean for what unemployment might look like in the first quarter of 2010? As an optimistic natured person I am saddened to say that the true unemployment is likely to push 20% in 2010.

It is reasonable to believe that the official unemployment rate will remain in double digits for a good part, if not most, of 2010. I hope I’m wrong. Yes our economy expanded 3.5% in the 3Q but most of that was due to the stimulus package. Yes the pace of job losses has slowed significantly this year but the numbers remain high.

Although the recession appears to be over the recovery will be slow and this likely will be a jobless recovery to boot.

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