The US economy shed more jobs last year than at any time since the end of the Second World War, it was confirmed yesterday, and the number of unemployed or underemployed people has hit 13.5 per cent.
The nervously anticipated labour market data for December was as grim as economists had predicted, showing that a further 524,000 jobs were eliminated in the final month of the year, taking the 2008 total to 2.6 million.
The number of people out of work reached 7.2 per cent of the population, more than expected, and there was a growing focus yesterday on the millions of Americans who do have some employment but who are working only occasionally or part-time, when what they want are full-time jobs. Adding in these "underemployed" people, many of whom are facing economic hardship, the jobseeker rate is 13.5 per cent, up almost 6 percentage points on December 2007.
The data "underscores the need for us to move with a sense of urgency and common purpose" on an economic stimulus package, President-elect Barack Obama said yesterday. Unless people are put back to work, long-term unemployment and its drag on the overall economy would become "more and more difficult to contain with time", he said.
Financial markets are looking to the US government to act swiftly to restore economic growth. The incoming Obama administration is working on an $800bn stimulus package, combining public works projects and tax cuts, but left-leaning Democrats have begun to agitate to raise the public spending portion of the proposed bill – potent-ially threatening a drawn-out political tussle over its passage.
Meanwhile, Mr Obama's incoming Treasury Secretary, Tim Geithner, is working on a plan to widen the scope of the $700bn Wall Street bailout package passed last October, to include relief for homeowners and consumers, as well as small businesses and local authorities. The first half of the bailout money has been spent by the Bush administration, mainly to help recapitalise the banking system and to prop up the near-bankrupt car industry.
The use of funds so far was criticised by a Congressional oversight panel in strident terms yesterday. No part of the money has so far been used to help homeowners facing foreclosure, the panel said.
The financial crisis that began in the US housing market spread gradually over the past two years to infect the global banking system and has now triggered recessions in many countries around the world.Reuse content