WASHINGTON – Trying to survive a deepening recession, employers are cutting their work forces to the bone, leaving more Americans unemployed and with dim prospects of finding a new job any time soon.
The Labor Department releases a report Friday expected to show the employment market turned worse in December, capping a year when job losses were logged every month.
With employers throttling back hiring, the unemployment rate is expected to jump from 6.7 percent in November to 7 percent in December, according to economists' forecasts. If they are right, that would mark the highest jobless rate in 15-1/2 years.
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Nervous employers probably axed another 550,000 jobs last month, economists forecast. That would bring the net number of jobs lost for all of 2008 to 2.46 million. Some however, think the number of jobs cut last month will be higher — 600,000 or 700,000.
If the conservative 2.4 million estimate of net payroll reductions for 2008 proves correct, it would mark the first annual job loss since the previous recession in 2001. It also would be the worst year of job losses since 1945, when employers slashed nearly 2.8 million jobs, though the number of jobs in the U.S. has more than tripled since then.
Employers are chopping costs as they try to cope with dwindling appetite from customers in the United States as well as in other countries, which are struggling with their own economic problems.
The U.S. recession, which just entered its second year, is already the longest in a quarter century, and is likely to stretch on 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 make the current 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.
President-elect Barack Obama says a bold approach is needed to bust through this cycle and revive economy.
"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," he said Thursday.
"If nothing is done, this recession could linger," Obama warned. "The unemployment rate could reach double digits."
Obama, who takes over Jan. 20, is promoting a massive package of tax cuts and government spending that could total $775 billion over two years. With add-ons by lawmakers, the package could swell to $850 billion, his advisers say.
Even with a new government stimulus, the unemployment rate is expected to keep rising this year. Some think it could hit 9 percent or 10 percent at the end of this year.
This week alone, drugstore operator Walgreen Co., managed care provider Cigna Corp., aluminum producer Alcoa Inc., data-storage company EMC Corp. and computer products maker Logitech International all announced major layoffs to cope with the recession.