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article imageUS Job Losses Hit 25 Year High

By Bob Ewing     Mar 7, 2009 in Business
The month of February saw the US economy lose 651,000 jobs which results in a record high unemployment rate of 8.1 percent.
February was a brutal month for the United States economy. The unemployment rate hit a new record high and now stands at 8.1 per cent as a total of 651,000 jobs were lost.
The number of nonfarm job losses was in line with most forecasts, however, it shows the true nature of the US economy as companies slash jobs to cope with an intensifying slump.
The Labor Department report also pushed up estimates for losses for the previous two months -- 655,000 in January from 598,000, and 681,000 in December from 577,000. That made December's losses the worst on record since October 1949.
In January the unemployment stood at 7.6 percent in January and rose to 8.1 in February, the highest since December 1983.
"It's ugly and always seems to be uglier than the previous month," said Robert MacIntosh, chief economist at investment firm Eaton Vance.
"It's a deep and dark recession."
The report suggests a long road to recovery for the battered economy.
"I think you have to go into 2010 to actually start to see growth," he said.
President Barack Obama said the "astounding" figures would cause him to redouble efforts to promote economic recovery.
"This country has never responded to a crisis by sitting on the sidelines and hoping for the best," Obama said in Columbus, Ohio.
"We have a responsibility to act, and that's what I intend to do as president."
There can be little doubt, based upon this report that the government is facing major challenges in their efforts to stabilize a teetering financial system and pulling the shrinking economy out of a downward spiral.
The US gross domestic product contracted at an eye-popping 6.2-percent pace in the fourth quarter of 2008, and some analysts say the downturn may be even worse in the first quarter of 2009.
"There is no silver lining here," said Nigel Gault, economist at IHS Global Insight.
"The recession is deepening; there is no sign yet even that the rate of contraction is slowing."
There are estimates the jobless rate could accelerate to 10 percent, making it harder for the US to pull itself out of the slump.
"The deteriorating job picture threatens to magnify the recession by further undermining income, spending and confidence," he said.
"Although the government's aggressive policy response will help, it will take time," Aaron Smith at Economy.com said.
Some see small signs0 f hope amid the gloom due to a small improvement from December and January.
"It was an awful report but it was not a death spiral report," said Cary Leahey, senior economist at Decision Economics, who said some had been bracing for losses of up to one million jobs.
"While things are terrible, we are tracking the 1981-82 recession very closely."
Leahey added that with tax cuts and various financial rescues taking hold, "I don't see why the economy can't bottom in the next three to six months."
Robert Brusca at FAO Economics said the report suggested the worst job losses are past: "The revisions have made the trend looking ahead much less bad.... The pattern of declines no longer points to a continuing deceleration."
There have been 4.4 million jobs lost since the recession began in December 2007, 2.6 million of them in the past four months.
The goods-producing sector shed 276,000 jobs in February while services lost 375,000; within the goods-producing sector, manufacturing lost 168,000 jobs.
Education and government were among the few sectors showing modest job gains.
There are a total 12.5 million unemployed in the United States, after a modest increase in the labor force.
The number of persons who worked part-time for economic reasons in February who are sometimes referred to as involuntary part-time workers rose by 787,000, reaching 8.6 million.
This total includes people who would like to work full time but were working part time because their hours had been cut back or because they were unable to find full-time jobs.
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