Former Fed Chairman Alan Greenspan tossed out two more cents on the economy on Sunday, estimating that the recovery will be a little more V-shaped than he previously thought, with 3 percent growth in the quarter just ended instead of 2.5 percent (and "possibly even higher.")
It's nice to have that extra 50 basis points of GDP, perhaps, but it won’t mean job growth. Greenspan predicted that unemployment would reach the 10 percent level pundits have been fretting about for months now. Unemployment "is going to penetrate the 10 percent barrier before heading down," is how he put it, as if unemployment were crashing through anything besides a psychological barrier.
Joblessness is nearly at that level already, with the U.S. Department of Labor reporting on Friday an official rate of 9.8 percent in September. Economists (as polled by Bloomberg) expected a lower number (180,000), but in fact payrolls dropped by 263,000 last month. Even state and local governments have been cutting back as their income suffers.
The construction industry, long a sufferer in this recession, continued to suffer in September as the industry shed 64,000 jobs. Since the end of 2007, some 1.5 million construction jobs have evaporated. Likewise, the financial sector continued to lose in September, with 10,000 people being shown the door. The industry has lost 541,000 positions since the beginning of the recession.
Wall Street did its best to have an up day on Friday, but the bears got the better of the market by the end of the day. The Dow Jones Industrial Average ended down 25.31 points, or 0.27 percent, while the S&P 500 lost 4.5 percent and the Nasdaq dropped 0.46 percent.