A sign on the downtown civic plaza directs citizens who need to file unemployment information to a satellite location in Elkhart, Ind. Wednesday Feb. 4, 2009. The U.S. Labor Department says that the Elkhart-Goshen area posted the largest jobless rate in the nation from, at 15.3 percent (AP Photo/Joe Raymond)
Jobless rate 7.6 pct; 598K job cuts most since '74
WASHINGTON (AP) — Recession-battered employers eliminated 598,000 jobs in January, the most since the end of 1974, and catapulted the unemployment rate to 7.6 percent. The grim figures were further proof that the nation's job climate is deteriorating at an alarming clip with no end in sight.
The Labor Department's report, released Friday, showed the terrible toll the drawn-out recession is having on workers and companies. It also puts even more pressure on Congress and President Barack Obama's administration to revive the economy through a stimulus package and a revamped financial bailout plan, both of which are nearing completion.
Obama decried as "inexcusable and irresponsible" the delay of his economic recovery legislation in Congress with an estimated 3.6 million Americans losing their jobs since the recession began in December 2007. About half of them have lost jobs in only the past three months.
Obama acknowledged the $900-billion-plus stimulus plan was not perfect and pledged to work with lawmakers to refine the measure, which he called "absolutely necessary."
"These numbers demand action. It is time for Congress to act," Obama said bluntly. "That's 3.6 million Americans who need our help."
The latest net total of job losses was far worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.
With cost-cutting employers in no mood to hire, the unemployment rate bolted to 7.6 percent in January, the highest since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than the 7.5 percent rate economists expected.
Vanishing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench, which has required companies to pull back. It's a vicious cycle where the economy's problems feed on each other, perpetuating a downward spiral.
"Companies are in survival mode and are really cutting to the bone," said economist Ken Mayland, president of ClearView Economics. "They are cutting and cutting hard now out of fear of an uncertain future."
If part-time employees, discouraged workers and others are factored in, the unemployment rate would have been 13.9 percent in January, the highest on record.
Many economists said the job losses for February are likely to be just as bad, and they don't expect the labor market to return to decent health until 2011 at the earliest.
But on Wall Street, investors pushed up stock prices on hopes that the miserable jobs report would get Congress to move quickly on the economic revival package. The Dow Jones industrials gained about 225 points in afternoon trading and broader stock indicators also rose.
Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982, partly reflecting heavy losses at plants making autos and related parts. Construction companies got rid of 111,000 jobs. Professional and business services chopped 121,000 positions. Retailers eliminated 45,000 jobs. Leisure and hospitality axed 28,000 slots.
Those reductions swamped employment gains in education and health services, as well as in the government.
Employers are slashing payrolls and turning to other ways to cut costs — including trimming workers' hours, freezing wages or cutting pay — to cope with shrinking appetites from customers in the U.S. and overseas, who are struggling with their own economic troubles.
The average work week in January stayed at 33.3 hours, matching the record low set in December.
With no place to go, the number of unemployed workers climbed to 11.6 million. In addition, 7.8 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.
For example, more than 200,000 state government employees were expected to stay home without pay Friday in California, which began its first-ever furlough to save money during the ongoing fiscal crisis.
Job hunters also are facing longer searches for work.
The average time it took for an unemployed person to find any job — full or part time — rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, underscoring the increasing difficulty the out-of-work are having in finding a new job.
Workers with jobs saw modest wage gains.
Average hourly earnings rose to $18.46 in January, up 0.3 percent from the previous month. Over the year, wages have risen 3.9 percent.
An avalanche of layoffs is slamming the nation from a wide swath of employers.
Caterpillar Inc., Pfizer Inc., Microsoft Corp., Estee Lauder Cos., Time Warner Cable Inc., and Sprint Nextel Corp. are among the companies slicing payrolls. Manufacturers — especially car makers — construction companies and retailers have been particularly hard hit by the recession. Talbots Inc., Liz Claiborne Inc., Macy's Inc. and Home Depot Inc. are all cutting jobs. So are Detroit's General Motors Corp. and Ford Motor Co.
For all of 2008, the economy lost a net total of 2.9 million jobs, according to revised figures. That marked the biggest annual loss on record and was worse than the 2.6 million initially estimated last month.
Americans cut back sharply on spending at the end of last year, thrusting the economy into its worst backslide in a quarter-century. The tailspin could well accelerate in the current January-March quarter to a rate of 5 percent or more as the recession drags on into a second year, and consumers and businesses burrow deeper.
Many economists predict the current quarter — in terms of lost economic growth — will be the worst of the recession.
With fallout from the housing, credit and financial crises — the worst since the 1930s — ripping through the economy, analysts predict 3 million or more jobs will vanish this year even if lawmakers quickly approve Obama's stimulus plan.
Obama has repeatedly pressed Congress to swiftly enact a package of increased government spending, including big public works projects and tax cuts, to revive the economy and create jobs. He says his plan will save or create more than 3 million jobs in the next two years.
But the recession has proven stubborn. Despite record low interest rates ordered by the Federal Reserve and a raft of radical programs, including a $700 billion financial bailout, consumers and businesses face high hurdles to borrow money. Foreclosures are skyrocketing, home prices are sinking and Wall Street remains on edge.
As a result of the ongoing global financial crisis of 2008–2009, American employers have cut 598,000 jobs over the past month, the most in one month since December 1974. The unemployment rate also rose approximately 0.4 percent, bringing the rate up to 7.6 percent (11.6 million people), the highest since January 1992. This is according to the United States Labor Department's monthly unemployment report released last week.

US President Barack Obama asked Congress today to support and quickly pass a $900 billion economic stimulus package that would, according to some, help create more jobs and decrease the unemployment rate. "All of us in Washington must remember that we’re here to work for the American people. And if we drag our feet and fail to act, this crisis will turn into a catastrophe," said Obama in a statement this morning. 

Obama warned that the rate could grow to double digits if Congress did not act fast and pass the bill allowing the package, and stated that the report was "very troubling."

"These numbers demand action. It is time for Congress to act," he also said, "That's 3.6 million Americans who need our help," he stated, referring to the number of American workers that had been laid off since the United States officially entered economic recession in December 2007.

Factories have been hit the hardest in the past month, laying off 207,000 workers, approximately 20 percent of the month's layoffs and the most by the industry since 1982. The next highest was the construction industry, which cut an estimated 110,000 workers last month. Other hard-hit industries include the financial industries, cutting 42,000 jobs, the retail industry, which cut 46,000, and leisure and hospitality, losing 28,000 workers.

"This is a horror show we’re watching. By every measure available - loss of employment and hours, rise of unemployment, shrinkage of the employment to population rate - this recession is steeper than any recession of the last 40 years, including the harsh recession of the early 1980s," stated Lawrence Mishel, an economist and president of the Economic Policy Institute, a US-based research organization focused on the economy. Economic forecasters reported that their predictions had actually been less severe than the report stated.

The United States Congress is currently debating a $900 billion economic stimulus bill that will attempt to halt the recession, and will continue to do so until a measure has been reached.