Unemployment could get 'truly gruesome', analysts predict

The job market was even weaker at the end of 2008 than earlier thought, according to new data that do not offer hope that the picture will brighten any time soon.

The reports sent stock prices tumbling and boosted efforts in Washington to pass an economic stimulus package.

Employers shed a seasonally adjusted 693,000 jobs in December, up from 476,000 in November, ADP and Macroeconomic Advisers said. It was the largest decline in the eight-year history of the report, which uses payroll data and statistical models to gauge the job market.

Macroeconomic Advisers Chairman Joel Prakken predicted more "truly gruesome" jobs numbers in coming months.

"The U.S. economy is now slipping into what will prove to be one of the worst downturns since World War II," he said.

Online help-wanted ads in December fell 507,000 to 3.861 million, the first time there were fewer than 4 million openings online since July 2006, the Conference Board said Wednesday.

The gloomy news knocked down the Dow Jones industrial average by 245.40 points, or 2.7%, to 8769.70.

The government on Friday will release official data on the job market in December based on surveys of businesses and households. That report could show the unemployment rate jumped to 7% or higher, up from 6.7% in November. The jobless rate has not topped 7% in more than 15 years.

The news hasn't gotten better in 2009. Already this year a number of firms, including aluminum producer Alcoa, Cessna Aircraft, clothing manufacturer Perry Ellis and health-services firm Cigna, have announced they are cutting jobs.

Concern about rising unemployment is spurring Congress to move quickly on President-elect Barack Obama's proposal for $775 billion in new spending and tax cuts over the next two years.

Robert Reich, former Labor secretary in the Clinton administration who is now a professor at the University of California-Berkeley, warned lawmakers Wednesday that unemployment could rise to 10% without a stimulus package, and underemployment — a broader measure of job market distress that includes people who have given up looking for work — could hit 15%.