Jobless rate rises to 26-year high

Many think the jobless rate could rise as high as 10.7 percent by the second quarter of next year before it starts to make a slow descent. Some think the rate will top out at 11 percent. The post-World War II high was 10.8 percent at the end of 1982, when the country had suffered through a severe recession.

Federal Reserve Chairman Ben Bernanke predicts the recession will end this year, with many economists forecasting that the economy will start to grow again as soon as the current July-September quarter.

But recoveries after financial crises tend to be slow, which is why economists predict it will take years for the job market to return to normal. Some predict the nation's unemployment rate won't drop to 5 percent until 2013.

An elevated unemployment rate could become a political liability for Obama when congressional elections are held next year. The last time the unemployment rate topped 10 percent, the party of the president — then Ronald Reagan's Republicans — lost 26 House seats in midterm elections in 1982.

So far, many people are saving — rather than spending — the extra money in their paychecks from Obama's tax cut, blunting its help in bracing the economy. Much of the economic benefit of Obama's increased government spending on big public works projects won't kick in until 2010, analysts say.

The White House last week said federal money was being shoveled out of Washington quickly, but states aren't steering the cash to counties that need jobs the most.

Large job cuts have continued this week. Newspaper publisher Gannett Co. said it plans to cut 1,400 jobs in the next few weeks, about 3 percent of the work force, as it faces a prolonged slump in advertising revenue. Farm machinery company Deere & Co. said 800 salaried employees, or 3 percent of its salaried work force, took a voluntary buyout offer.

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