September jobless numbers point to continued weak consumer spending

10/11/2010 3:25 pm EST


Jim Jubak

Founder and Editor,

Disappointing job numbers on Friday, October 8. The government’s monthly payroll figures showed a decline of 95,000 jobs in September. That’s worse than the 57,000-job drop in August. According to, economists had expected the payroll number to be unchanged in September.

The big culprit, as has been the case for months now, was layoffs by state and local governments—with a dollop of damage from the end of temporary jobs for the federal census. (Only about 6,000 census workers remain on the federal payroll so future job losses from this source will be minimal.) State and local governments cut 83,00 jobs in September as these governments struggle to balance their budgets. About 57,000 of those jobs losses came in education. Adding jobs lost from the end of temporary census jobs brings the total job loss in the government sector to 159,000.

Private payrolls rose for a ninth consecutive month but not by enough to offset the job losses in the government sector. Private sector jobs climbed by just 64,000 for September. Economists had been expecting a gain of 74,000 private sector jobs.

The official unemployment rate remained steady at 9.6%, as the softness of the job market has depressed the number of discouraged workers re-entering the work force. The full unemployment rate, which includes discouraged workers and workers with temporary jobs but who would like a full-time job, rose to 17.1% from 16.7%.
One number below the headline figures suggests continued struggles for consumers and companies that depend on consumer spending.Average hourly earnings, which had increased for the last two months, were flat in September. Economists had expected a gain of 0.2%. Average weekly hours worked also stayed flat for the month. That combination isn’t going to make consumers open up their wallets this holiday shopping season. Projections now call for a 2% increase in retail sales during the holiday retail season from 2009 levels.

The official unemployment rate has now equaled or exceeded 9.5% for 14 consecutive months. That beats the 13-month string in the 1982-1983 recession. So we’re now in the midst of the longest period of monthly unemployment of 9.5% or more since the government began keeping monthly records in 1948.

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