Department of Labor Releases New Unemployment Figures

9.7 percent. That’s where the unemployment rate stood after the Department of Labor’s latest release — the highest level the country had seen in 26 years, since the early days of the Reagan administration.

A Rate Not Seen Since 1983

The August jobs report, released the first Friday of September, showed the economy still losing jobs, though at a considerably slower pace than the free-fall of the preceding winter. Stuart Hoffman, chief economist at PNC Financial Services Group, offered a characteristically economist-flavored silver lining to the numbers: “We’re at the point where the slowdown in layoffs will lead to some hiring and job gains, not in the next few months but probably by the first part of 2010.” His timeline would prove roughly accurate, if cold comfort to anyone counting on faster relief.

Federal Reserve policymakers, in minutes from their own recent meeting released the same week, described labor market conditions as still “poor,” warning that businesses were likely to remain “cautious in hiring” even once broader economic growth resumed. That caution reflected a genuinely uncomfortable reality facing the Fed and the Obama administration alike: private economists and the central bank itself were both bracing for unemployment to climb past 10 percent before year’s end — a threshold that would, in fact, be crossed within two months.

The Stimulus Debate, Playing Out in Real Time

The report landed squarely in the middle of an active political argument over whether the Obama administration’s $787 billion stimulus package, combined with programs like Cash for Clunkers, was actually working. Some economists credited those programs with helping to slow the pace of layoffs; others were already voicing a different worry entirely — what happens to the labor market once the stimulus money runs out and its temporary support fades. That tension between crediting current relief and worrying about the cliff on the other side of it would define economic policy debates for the following two years.

Treasury Secretary Timothy Geithner, speaking at a G-20 finance ministers meeting in London the same week, tried to hold both realities at once. “You’re seeing the first signs of positive growth now in this country and countries around the world,” Geithner told reporters, before adding the caveat that would come to define nearly every official statement on the economy that year: “We’ve come a very long way, but I think we have to be realistic.” He also flagged a risk that would shadow policy debates well into the following year — that pulling back government spending and monetary support too soon could tip the fragile recovery into a “double dip” recession.

A Report That Reads Differently in Hindsight

From the vantage point of anyone tracking these monthly releases in real time, each report like this one functioned as a kind of Rorschach test: economists inclined toward optimism pointed to the slowing pace of losses; those more skeptical pointed to the rate itself, still climbing, still record-setting by recent historical standards. Both readings were, in a narrow sense, correct — which is precisely what made monthly employment reports in this stretch of the recession so difficult to parse into a single clean narrative, month after month, for nearly two more years.

For related coverage of unemployment trends during this period, see our piece on July 2009’s better-than-expected jobs report, or browse our full Labor & Economy