Employers in the United States cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8%. This figure is the highest unemployment rate in over 26 years. The government also revised job losses for the months of July and August to show an additional 13,000 jobs were lost than previously reported.
The US Labor Department reported that since the start of the recession in December 2007, the ranks of unemployed people has swelled by 7.6 million to 15.1 million. Payrolls have now dropped for 21 consecutive months in the United States and the total number of jobs lost in this recession is the worst since the Great Depression.
Continuing job losses are fueling fears that the weak labor market may undermine any economic recovery and stubbornly high unemployment is viewed as the missing link in the economy’s recovery. While the decline in payrolls has moderated from the rapid pace of layoffs earlier this year, firms are still not hiring on a wide scale. Companies are likely waiting for a signal that the economy recovery is sustainable.
It appears that many corporate executives have serious doubts about the sustainability of the current economic recovery. This is evidenced by the continued heavy insider selling by executives of public companies (the figure from late August was more than 60-to-1). The bleak employment picture has also raised caution flags on Wall Street, where some are worried that the 50% rally in equities since March may have come too far too fast.