Unemployment Hits 10.2 Percent, Highest Since 1983

Overall unemployment jumped to 10.2% in October, far higher than most analysts estimates of 9.9%. And while many economists projected unemployment to continue to rise well into next year, many were forecasting peak unemployment at 10.2% or possibly as high as 10.5%. Many of those same economists are now acknowledging that they will likely need to revise their numbers upward to account for the unexpected spike.

This news comes on the heels of another economic report which indicated that productivity among U.S. workers' had actually increased significantly over the past several months. This is an expected trend as companies lay off employees and realize that fewer employees can still produce at the same level as a higher number of employees, in many instances. As companies are forced to cut costs, they often become more efficient in their operations and profits increase.

This is a natural aspect of economic recovery, as many companies will improve efficiency in down times and then expand once again to meet increased demand and growth when the economy is growing at a healthy pace. With the housing market being buoyed by stimulus plans and tax credits for home buyers, the two largest remaining pieces to economic recovery remain the unemployment rate and the commercial credit freeze. The two are obviously closely related as businesses unable to access credit are going to be forced to cut back their workforce and/or close their doors altogether.

When commercial credit markets begin functioning normally, unemployment will fall and things will begin to stabilize in earnest.