The Bureau Labor of Statistics (BLS) announced today that the unemployment rate increased from 9.8% in September to 10.2%, the highest since 1983. 190,000 non-farm jobs were lost. 8.2 million people lost their job since December 2007, the beginning of the economic meltdown. In October, the number of unemployed persons increased by 558,000 to 15.7 million.
On a normal day, one would have taken this as a disastrous number. After all, 10% was thought of a psychological level just like Dow Index 10,000. But, nothing, nada!
The news received fairly silent treatment from the market as the market wanders around a very narrow range for the most part of the trading day (It's 2.34pm EST now). With a number like this and there is no triple digit sell-off, not even a double digit sell-off, not even a knee-jerk reaction, there is only one obvious reason: People are not panicky. People saw it coming and people believed this was as bad as it could get.
On the hind sight, it probably should not be a surprise after all. The survey of 52 economists by Wall Street Journal in September reported that most economists still expected the unemployment rate would climb to 10.2%, from September's 9.7% , before falling early next year. These economists also in general expected jobs being added in the next 12 months although they expected only 200,000 jobs will be added. They expected the unemployment rate to stay as high as 9.3% in December 2010.
This is quite consistent with the Fed's forecast in September FOMC minutes. The Fed expected the unemployment rate to stay around 9.4% in 2010 and come down to 8% only in 2011.
So, now we know people did see it coming and it should not come as a surprise that the unemployment rate will stay high for quite a while (which is typical of recessions in 1990s and 2000s). The next question we have to get ahead is: Is 10.2% as bad as it can get?