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Unemployment up as Fed plans more stimulus money


The nation’s jobless rate rose to 9.8 percent in November, the highest since April, Bloomberg reported.

The 0.2 point increase, from 9.6 percent in October, underscores a decision last month by the Federal Reserve to begin purchasing Treasury securities and inject up to $600 billion into the financial system to stimulate growth and keep interest rates low.

A report released today by the U.S. Department of Labor showed that payrolls increased by only 39,000, less than what economists had forecast, as more Americans face the reality of long-term unemployment.

The percentage of unemployed workers who have been jobless for at least 27 weeks increased to as to 41.9 percent, the highest level since August.

“The labor market is capping off a very poor recovery this year,” said Guy LeBas, chief fixed-income strategist with Philadelphia-based Janney Montgomery Scott LLC. “I don’t think we’ll slide back into job losses, but being stuck in neutral isn’t good. While consumer spending has normalized, employers are uncertain about demand going into 2011.”

Last week, the U.S. Department of Commerce said household purchases rose in October for the fourth consecutive month. In the third quarter, gross domestic product expanded at a 2.5 percent annual rate.

And though the economic data indicates the recovery is accelerating, the more than 8 million jobs lost as a result of the recession won’t be restored quickly.

“The labor market is not turning around, and that’s key to the overall recovery,” said David Semmens, a U.S. economist at Standard Chartered Bank in New York. “Anyone who feels that the Fed perhaps acted too prematurely is definitely going to have to eat their words.”

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