Jobless rate spikes to 7.2% as Dec. payrolls plunge by 524,000
WASHINGTON -- The unemployment rate jumped to 7.2% in December, the highest in nearly 16 years, as employers slashed the most jobs in 2008 since 1945, the government said Friday in a report that painted a grim picture of the U.S. job market.
The jobless rate was up from 6.8% in November. The increase brought the rate to the highest since January 1993, the Labor Department said. More than 11.1 million Americans were unemployed in December, up 3.6 million from when the recession began in December 2007 and the highest since June 1983.
Firms cut a seasonally adjusted 524,000 workers in December following a 584,000 reduction in November. Employers cut 2.065 million jobs in 2008, 1.9 million of those layoffs happened in the last four months of the year.
Economists say the number of unemployed will rise far higher before the job market stabilizes as the USA remains in what may be the longest and deepest recession in the post-war period.
IHS Global Insight chief economist Nariman Behravesh says he expects jobs to be lost through most of the year, but says the losses could ease if Congress acts soon.
"If a large fiscal stimulus package can be enacted quickly, then the pace of job losses in the second half of the year can be slowed and by early 2010 the prospects for the U.S. economy starting to create jobs again will be good," he says. "Nevertheless, the current pace of job losses means that the unemployment rate will rise into the 9% to 9.5% range, at a minimum, before leveling off."
President-elect Barack Obama said in a morning news conference that the jobs data were a "stark reminder about how urgently action is needed." Obama is working with Congress on a massive stimulus package around $800 million that would include tax cuts and spending to boost the economy.
"Today's job report only underscores the need for us to move with a sense of urgency and common purpose," Obama said. "Behind each and every one of those millions of jobs lost, there are workers and families who are counting on us as they struggle to pay the bills or stay in their homes. There are American dreams that are being deferred and that are being denied because of the current economic climate. There is a devastating economic crisis that will become more and more difficult to contain with time."
