The unemployment rate rose to 9.8 percent in September, the highest since June 1983, as employers cut far more jobs than expected
The report shows that the worst recession since the 1930s is still inflicting widespread pain and underscores one of the biggest threats to the nascent economic recovery: that consumers, worried about job losses and stagnant wages, will restrain spending. Consumer spending accounts for about 70 percent of the nation's economy.
President Barack Obama called the latest jobless figures a "sobering reminder" that the nation's economic recovery has a way to go.
Most analysts expect the economy to continue to improve, but at a slow, uneven pace. Government stimulus efforts, such as the Cash for Clunkers auto rebates, likely boosted the economy in the July-September quarter, but economists worry that growth will slow once the impact of such programs fades
The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, from a downwardly revised 201,000 in August. That's worse than Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters.
The unemployment rate rose from 9.7 percent in August, matching expectations.
If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the unemployment rate rose to 17 percent
, the highest on records dating from 1994.
The department said 571,000 of the unemployed dropped out of the work force last month
, presumably out of frustration over the lack of jobs. That sent the participation rate, or the percentage of the population either working or looking for work, to a 23-year low.
The unemployment rate would have topped 10 percent if the labor force hadn't shrank
Older, laid-off workers are dropping out and requesting Social Security at a faster-than-expected pace, according to government officials. The Social Security Administration said earlier this week that applications for retirement benefits are 23 percent higher than last year, while disability claims have risen by about 20 percent.
Meanwhile, the number of people out of work for six months or longer jumped to a record 5.4 million, and they now make up almost 36 percent of the unemployed - also a record.
Federal Reserve Chairman Ben Bernanke said Thursday that even if the economy were to grow at a 3 percent pace in the coming quarters, it would not be enough
to quickly drive down the unemployment rate. Bernanke said the rate is likely to remain above 9 percent through the end of 2010.
The average hourly work week fell back to a record low of 33 in September. That figure is important because economists are looking for companies to add more hours for current workers before they hire new ones
According to a separate report Friday, U.S. factory orders fell in August by the largest amount in five months
The Commerce Department said demand for manufactured goods dropped 0.8 percent, much worse than the 0.7 percent gain that economists had expected
. The August decline reflected plunging demand for commercial aircraft, a category that surged in July.