Dismal Jobless Rate Likely to Get Even Worse: Economists
As bad as Friday's anemic jobs report turned out, it's just the beginning of a further rise in unemployment that will reach double digits, Mark Zandi, chief economist at Moody's told CNBC.
"Friday's numbers are surprising and don't feel right relative to other economic data," Zandi said. "But once the economy gets in a groove, we're going to see more unemployment as the labor force grows. We could see 10 percent by the end of this year or early in 2011."
"The labor force participation rate fell to 64.5 percent last month," Zandi added. 'That's a record low in a recession, but it's going to rise for sure as the economy improves and create more unemployment."
Diane Swonk, chief economist at Mesirow Financial, agreed with Zandi.
"I'm not surprised by the 9.8 percent unemployment rate," Swonk went on to say. "It does give us pause at how uneven the recovery is. But I see unemployment getting into double digits as the economy sees some growth and even more people are looking for work."
Zandi said that Friday's job numbers are a call for action by both Congress and the Obama administration to help the jobless.
"Unemployment benefits should be extended for at least a few months," Zandi said. "I do think this argues strongly for the idea of extending them."
"Mark's right on that," Swonk added. "The uptick in terms of percentage of people who are on long term unemployment, it really underscores the issue. The loss of that income, even at the low end of income strata, it's really humanitarian aid at this point."
Besides extending unemployment benefits, Both Zandi and Swonk said the high jobless rate would also help push Congress to extend the Bush tax cuts for everyone.