The US economy probably lost more jobs last year than in any year since the end of World War II as firings rippled from homebuilders and automakers to banks and retailers, a government report may show this week.
Payrolls fell 500,000 last month, bringing last year’s decline to 2.4 million, the most since 1945, according to the median estimate of economists surveyed by Bloomberg News ahead of Labor Department figures due out on Friday. The unemployment rate likely jumped to the highest level since 1993.
The figures will underscore the urgency behind US president-elect Barack Obama’s plan to pass a stimulus package that will create jobs and mitigate the recession, already the longest in a quarter century. Other reports may show slumps in housing, manufacturing and service industries deepened at the end of last year, setting the stage for more weakness this year.
“We’re continuing to lose massive amounts of jobs,” said Michael Feroli, an economist at JPMorgan Chase & Co in New York. “The negative momentum carrying over into the first half of 2009 will hold down the economy regardless of policy.”
The unemployment rate probably climbed to 7 percent last month from 6.7 percent the prior month, the survey median showed.
Manufacturers probably cut 103,000 workers from payrolls, the report may also show. Factories, which make up 12 percent of the economy, shrank last month 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 US$13.4 billion in federal loans to avert bankruptcy. GM, whose shares slid 87 percent last year — the most among the 30 companies in the Dow Jones Industrial Average — and Chrysler probably led a drop last month in US auto sales that capped the industry’s worst year since 1992, the average forecast of analysts surveyed showed.
The Tempe, Arizona-based ISM’s report on services, covering the rest of the economy, is due tomorrow. That index likely dropped last month 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-largest video-game publisher, last month boosted planned job cuts to 1,000, or 10 percent of its workforce, and said it would consolidate or close at least nine studio and publishing locations.
“Labor-market conditions have deteriorated,” US Federal Reserve policy makers said last month when they cut the benchmark interest-rate target to as low as zero.
The central bank has also said it would buy debt as the next step in combating the recession, now in its 13th month. Minutes of the Fed’s Dec. 16 meeting will be released tomorrow.
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 3 million jobs, may be worth as much as US$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.