The report shows that the worst recession since the 1930s is still inflicting widespread pain and underscores one of the biggest threats to the nascent economic recovery: that consumers, worried about job losses and stagnant wages, will hold the line on spending. Consumer spending generally accounts for 70 percent of the national economy.
All told, 15.1 million Americans are out of work, the department said. And 7.2 million jobs have been eliminated since the recession began in December 2007.
"Consumers ... are going to struggle to increase their income," said Brian Fabbri, North American chief economist for BNP Paribas. "If they're struggling, they're not consuming. That just takes some of the legs out of recovery."
Most analysts expect the economy to continue to improve, but at a slow, uneven pace.
The Labor Department said Friday that the economy lost a net total of 263,000 jobs last month, a tally that was worse than Wall Street economists' expectations of 180,000 job losses, according to a survey by Thomson Reuters.
The 9.8 percent jobless rate is up from 9.7 percent in August.
If laid-off workers who have settled for part-time work or who have given up looking for new jobs were included in the percentage, which they aren't, the unemployment rate would have been 17 percent, officials said.
About 571,000 of the unemployed reportedly dropped out of the work force last month, presumably out of frustration over a lack of jobs. That sent the participation rate, or the percentage of the population either working or looking for work, to a 23-year low.
Meanwhile, the number of people out of work for six months or longer jumped to a record 5.4 million, and they now make up almost 36 percent of the unemployed — also a record.
"We still think the overall trend is moving in the right direction," said Christina Romer, chair of the President's Council of Economic Advisers. "We're going from much larger job losses earlier this year."
(2 of 2)Real Estate Outlook: Recession is OverTennessee’s jobless rate is worse than it looks
