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By Jason Stipp | 11-05-2009 01:47 PM

Unemployment: Brace for 10%

Morningstar's Bob Johnson says Friday's data may show unemployment crossing 10%, but other numbers deserve more attention.

Jason Stipp: I'm Jason Stipp with Morningstar. As we see economic indicators improve, the one that still has the potential to give the market fits is the unemployment rate. It's going to be reported tomorrow, and here with me with some insights and a preview is Morningstar's Bob Johnson. He's director of economic analysis at Morningstar. Thanks for joining me, Bob.

Bob Johnson: Nice to be here.

Stipp: So we saw some data today, productivity data, which was really good for the market. It was much better than expected. But I'm wondering in the back of my mind, is this going to have an effect on the jobs number? It seems companies are doing more with their existing employees. What's your take on the productivity number and how it might affect jobs and what we're going to see from jobs tomorrow?

Johnson: Sure. First, in the long run, productivity growth is outstanding. It is the way we get out of our debt problems. If productivity were to stay this high for a number of quarters, we wouldn't have a debt problem.

It would be a wonderful thing if productivity stayed this high, because as we have higher productivity, that means goods can be priced more attractively, and that attracts more buyers. And the more productivity we have, the better. And it's a really great thing. It's one of the reason I'm long-term bullish on the economy. We really seemed to have turned the corner on that productivity number.

The short-term problem with higher productivity is that it means less hours of input for each output. It means a little less employment. I think that October will actually look a little better employment-wise. And I think, at some point, the employers are going to have to let up. I think as the market gets a little bit tighter, as we're already seeing in select individual items, I think that there's a chance that the employment gets a little bit better.

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