Washington: A staggering 2.6 million jobs disappeared in 2008, the most since World War II, and the pain is only getting worse with 11 million Americans out of work and searching. Unemployment hit a 16-year high of 7.2% in December and could be headed for 10% or even higher by year’s end.
Friday’s government figures were “a stark reminder,” said President-elect Barack Obama, that bold and immediate government action is needed to revive a national economy that’s deep in recession and still sinking.
More than a half million jobs melted away as winter took hold in December - 524,000 in all, the government estimated - and the true carnage will almost certainly turn out to be even worse when the figures are nailed down more clearly a month from now.
“Behind the statistics that we see flashing on the screens are real lives, real suffering, real fears,” said Obama, already moving full-speed with Congress to put together an emergency revival plan a week and a half before taking office.
The severe recession, which just entered its second year, is already the longest in a quarter-century and is likely to stretch well into this year. The fact that the country is battling a housing collapse, a lockup in lending and the worst financial crisis since the 1930s makes the downturn especially dangerous.
All the problems have forced consumers and companies alike to retrench, feeding into a vicious cycle that Washington policymakers are finding difficult to break.
Investors, too. The Dow Jones industrial average fell 143 points on Friday to end the week down nearly 5%, the worst week since November.
The Labour Department’s unemployment report showed widespread damage across US industries and workers hitting blue-collar and white-collar workers, people without high school diplomas and those with college degrees.
And, there’s no relief in sight. The new year got off to a rough start with a flurry of big corporate layoffs, and there were more on Friday. Airplane maker Boeing Co. said it plans to cut about 4,500 jobs this year, and uniform maker G&K Services Inc. is eliminating 460 jobs.
Employers also are cutting workers’ hours and forcing some to go part-time. The average work week in December fell to 33.3 hours, the lowest in records dating to 1964 and a sign of more job reductions in the months ahead since businesses tend to cut hours before eliminating positions entirely.
“There is no indication that the job situation would stabilize anytime soon,” said Sung Won Sohn, economist at the Martin Smith School of Business at California State University. “This could turn out to be one of the worst economic setbacks since the Great Depression.”
Economists predict a net total of 1.5 million to 2 million or more jobs will vanish in 2009, and the unemployment rate could hit 9% or 10%, underscoring the challenges Obama will face and the tough road ahead for job seekers.
All told, 11.1 million people were unemployed in December. An additional 8 million people were working part time a category that includes those who would like to work full time but whose hours were cut back or those who were unable to find full-time work. That was up sharply from 7.3 million in November.
The unemployment rate zoomed from 6.8% in November, to 7.2% last month, the highest since January 1993.
Last year was the first that payrolls had fallen for a full year since 2002, and the loss was the most since 1945, when nearly 2.8 million jobs disappeared. Though the number of payroll jobs in the US has more than tripled since then, losses of this magnitude are still brutal.
Employment last month shrank in virtually every part of the economy construction companies, factories, mortgage brokers, banks, real-estate firms, accountants and bookkeepers, computer designers, architects and engineers, retailers, food services, temporary help firms, transportation, publishing and waste management.
The few fields spared included education, health care and government.
The lost-job total for December probably understated the reality since some companies probably held off on layoffs around the holidays, economists said. Moreover, the government collects the payroll information around mid-month. So the full extent of the layoffs probably wasn’t captured, making it even more likely there will be big reductions in January and that December’s cuts will be revised upward.