Unemployment Report Set to Reflect the Bitter Face of a Jobless Recovery

New statistics from the Labor Department today (Friday) will likely confirm that the U.S. economy is in a deeper hole than previously thought.

Economists expect that the national unemployment rate rose to 10.1% in January from 10% in December. More importantly, however, the number of jobs lost from April 2008 to March 2009 will be revised upwards by 824,000 - the largest margin in 18 years, according to Bloomberg News.

Most of those losses came from companies that closed or went out of business, which would undermine the popular birth/death model for joblessness. That model is based on the assumption that hirings at newly formed companies generally offset the job losses associated with company closures.

The revision is reflective of the austerity of the jobless recovery that has plagued the average American while helping return many companies to profit. The U.S. unemployment rate peaked at 10.2% in October, but for months it has lingered in double-digits. And economists expect it to remain there for much of 2010.

Adding to the somber tone permeating the labor market, the number of workers filing for first-time jobless benefits unexpectedly rose last week.

There were 480,000 initial jobless claims filed in the week ended Jan. 30. That's the highest level since Dec. 12 and up 8,000 from an upwardly revised 472,000 the previous week. The four-week moving average of initial claims, which smoothes out volatility, was 468,750, up 11,750 from the previous week's revised average of 457,000.

"The latest figures are clearly concerning, as they raise the possibility that claims are stabilizing at a high level," Abiel Reinhart, economist at JPMorgan Chase & Co. (NYSE: JPM) told The Wall Street Journal.

The Obama Administration's budget plan calls for $100 billion in additional stimulus spending as part of a new jobs package, including $61 billion to extend for one year the administration's "Making Work Pay" tax credit, which provided $400 to individuals and $800 to couples. And on Tuesday the U.S. President issued a proposal to provide community banks with $30 billion to increase lending to small businesses.

The new lending program aims to invest $30 billion in 8,000 banks to provide loans to businesses ready to hire new workers.  Funding for the program would come from money returned by large banks to the government's Troubled Asset Relief Program (TARP), and would require Congressional approval.

While these measures could alleviate some of the strain stemming from the dour labor market, they're mainly a political measure aimed at generating populist support in the run up to the midterm elections.

"I don't know anybody in business who hires an employee because they will get a tax break," one Democratic lawmaker told MarketWatch. "They hire employees because they have work to do."

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