26-Year High Joblessness is Even Worse Than You Think

Pacific Investment Management Co. CEO Mohamed El-Erian now sees the dismal unemployment rate as a sign of how bad the economy will look going forward. Usually the jobless rate is just considered helpful in figuring out how bad the economy has been. It’s not generally used as a signal of how the the economy will look in the future.

However, the September 9.8 percent jobless rate is a 26-year high, and it is twice what it was at the start of last year. The figure indicates that roughly 15 million Americans are right now scrambling to find work. El-Erian sees this high level of unemployment as putting significant “future pressures on consumption, housing and the country’s social safety net.”

He also refers to the strain as part of a “new normal” where the US will have less credit and fewer jobs. In light of these challenges in the economy, retailers are already scaling back their sales expectations for the coming holiday season. You can read more about this news, including new lower price targets from toymakers Mattel and Hasbro, in this Bloomberg coverage of unemployment and job losses.