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US job losses in 2008 may be worst since 1945

US job losses in 2008 may be worst since 1945
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First Published: Sun, Jan 04 2009. 09 09 PM IST
Updated: Sun, Jan 04 2009. 09 09 PM IST
Washington: The US economy probably lost more jobs in 2008 than in any year since the end of World War II as firings rippled from home builders and auto makers to banks and retailers, a government report may show this week.
Payrolls fell 500,000 in December, bringing last year’s decline to 2.4 million, the most since 1945, according to the median estimate of economists surveyed by Bloomberg ahead of Labor Department figures due 9 January. The unemployment rate likely jumped to the highest since 1993.
The figures will underscore the urgency behind President- elect Barack Obama’s plan to pass a stimulus package that will create jobs and mitigate the recession, already the longest in 25 years.
Other reports may show slumps in housing, manufacturing and service industries deepened at the end of last year, setting the stage for more weakness in 2009.
“We’re continuing to lose massive amounts of jobs, said Michael Feroli,” an economist at JPMorgan Chase and Co. in New York. The negative momentum carrying over into the first half of 2009 will hold down the economy regardless of policy.
The jobless rate probably climbed to 7% in December from 6.7% the prior month, according to the survey median.
Manufacturers probably cut 103,000 workers from payrolls, the report may also show. Factories, which make up 12% of the economy, shrank in December at the fastest pace in 28 years as new orders for products from cars to furniture reached the lowest level since records began in 1948, the Institute for Supply Management reported last week.
The Bush administration agreed last month to give General Motors Corp. and Chrysler Llc. $13.4 billion in federal loans to avert bankruptcy. GM, whose shares slid 87% in 2008—the most among the 30 companies in the Dow Jones Industrial Average—and Chrysler probably led a drop in December US auto sales that capped the industry’s worst year since 1992, according to the average forecast of analysts surveyed.
The Tempe, Arizona-based ISM’s report on services, covering the rest of the economy, is due 6 January. That index likely dropped in December to the lowest level since records began in 1997, the survey showed, as Americans cut back during what may have been the worst holiday shopping season in four decades of record keeping.
Electronic Arts Inc., the second biggest video game publisher, last month boosted planned job cuts to 1,000, or 10% of its workforce, and said it will consolidate or close at least nine studio and publishing locations.
Labour market conditions have deteriorated, Federal Reserve policymakers said last month when they cut the benchmark interest rate target to as low as zero.
The central bank also has said it will buy debt as the next step in combating the recession, now in its 13th month. Minutes of the Fed’s 16 December meeting will be released on 6 January.
Obama has pledged to invest in roads, schools and the US energy network, something akin to the 1950s-era interstate highway construction boom. The package, aiming to create or save three million jobs, may be worth about $850 billion.
The economy is still weighed down by housing, which is sliding into a fourth year of decline as foreclosures mount, prices drop and some buyers have trouble getting financing.
Fewer Americans signed contracts to buy previously owned homes in November, a report from the National Association of Realtors on 6 January may show. A decline would be the fourth in the past five months.
On Monday, a commerce department report may show construction spending fell 1.3% in November after dropping 1.2% the prior month, according to the median forecast.
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First Published: Sun, Jan 04 2009. 09 09 PM IST