The United States lost a staggering 533,000 jobs in November for the worst monthly decline in 34 years, putting new pressure on Congress and President-elect Obama to move aggressively to contain the widening economic crisis.
WASHINGTON — The United States lost a staggering 533,000 jobs in November for the worst monthly decline in 34 years, putting new pressure on Congress and President-elect Obama to move aggressively to contain the widening economic crisis.
The unexpectedly high job losses, coupled with the threat of an auto-industry collapse and escalating home foreclosures, point toward a much deeper recession than many economists had anticipated.
“With the loss of over a half-million jobs just last month, the U.S. job market is now shedding jobs at a truly alarming rate, a rate that is measurably worse than past recessions,” said Jared Bernstein, a labor economist at the Economic Policy Institute who has been named an adviser to Vice President-elect Joseph Biden.
“Policymakers need to recognize this as an emergency.”
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Adding to the grim news, the Labor Department said Friday that job losses in the previous two months were much worse than originally estimated: 403,000 in September and 320,000 in October. That’s more than 1.25 million jobs vanished in three months.
Harry Holzer, a labor economist at Georgetown University, warned that a cycle of job losses and foreclosures appears to be picking up steam. A trade group reported Friday that a record 1 in 10 U.S. homeowners were either late on mortgage payments or in foreclosure at the end of September.
“You’re at that point in the business cycle where declines feed on themselves,” Holzer said. “People who lose their jobs are going to have less money to make their housing payments, so that could increase foreclosures. They are also going to buy less, and declining consumer purchases are going to cause more job cuts.”
Altogether, businesses have laid off nearly 2 million workers in 2008, according to the Labor Department. Normally, the economy has to create 100,000 jobs a month, or 1.2 million a year, to keep pace with population growth.
The rate of unemployment also rose, although not as dramatically: from 6.5 to 6.7 percent. Economists said that’s because the government doesn’t count “discouraged” workers, and many of those who have lost their jobs aren’t even trying to find new ones.
When discouraged workers and involuntary part-timers are included, the effective unemployment rate rises to an estimated 12.5 percent.
For most of this year, the losses have been concentrated in the hard-hit manufacturing and construction sectors, but last month, no part of the economy was spared. That includes small businesses, which historically have been reluctant to part with trained workers.
“The fact that you are now seeing job losses in small companies tells you that this has now spread well beyond the manufacturing and housing sectors,” said Joel Prakken, chairman of Macroeconomic Advisers, an economic research firm in St. Louis.
The economy officially entered a recession a year ago, but economists said the downturn deepened sharply when financial markets crashed in September.
At the White House, President Bush made an increasingly rare public statement on the economy and for the first time used the word “recession.”
“Today’s job data reflects the fact that our economy is in a recession. This is in large part because of severe problems in our housing, credit and financial markets, which have resulted in significant job losses.”
Obama invoked public spending as the best way to get the economy moving again.
“This painful crisis,” he said in a statement, is an opportunity “to improve the lives of ordinary people by rebuilding roads and modernizing schools for our children,” and by investing in clean-energy projects.
A goal of his stimulus plan is to generate 2.5 million jobs over the next two years, he said.
But given the accelerating job losses, hitting that target would barely recover the jobs that have disappeared over the past year.
Information from The New York Times is included in this report.