Unemployment hits 10.2%, worst since '83

ECONOMY | Jobless claims hit 190,000 in October as economists issue bleaker recovery forecasts

WASHINGTON -- Just when it was beginning to look a little better, the economy relapsed Friday with a return to double-digit unemployment for only the second time since World War II and warnings that next year will be even worse than previously thought.

The jobless rate rocketed to 10.2 percent in October, the highest since early 1983, dealing a psychological blow to Americans as they prepare holiday shopping lists. It was another worse-than-expected report casting a shadow over the struggling recovery.

President Obama called it "a sobering number that underscores the economic challenges that lie ahead." He signed a measure to extend unemployment benefits and extended a tax credit for first-time home buyers.

Economists had not expected the 10 percent mark to come so quickly and darkened their forecasts. Mark Zandi, chief economist at Moody's Economy.com, and Joshua Shapiro, chief U.S. economist at MFR Inc., predicted the rate will peak at 11 percent by mid-2010. They earlier had projected 10.5 percent.

Unemployment at 11 percent would be a post-World War II record. Only once since then has joblessness hit double digits in the United States -- from September 1982 to July 1983, topping out at 10.8 percent.

"It's not a good report," said Dan Greenhaus, chief economic strategist for New York-based investment firm Miller Tabak & Co.

The Labor Department, using a survey of company payrolls, said the economy shed 190,000 jobs in October. A separate survey of households found 558,000 more people were unemployed last month than in September. About 15.7 million Americans are jobless.

The survey of companies doesn't count the self-employed and undercounts employees of small businesses. So the economic picture could be even more dire. And the unemployment rate doesn't include people without jobs who have stopped looking, or those who have settled for part-time jobs.

Already, consumer confidence for October came in well below what analysts were expecting. Shoppers' sentiments about the state of the economy are the gloomiest in nearly three decades.

AP