Saturday, 6 December 2008

US economy loses half a million jobs

US economic data on Friday were awful. Bloomberg reports:

U.S. companies slashed payrolls last month at the fastest pace in 34 years as the economy headed for its deepest and longest recession since World War II.

Employers cut 533,000 jobs, bringing losses so far this year to 1.91 million, the Labor Department said today in Washington. November’s drop exceeded all 73 forecasts in a Bloomberg News survey. The unemployment rate rose to 6.7 percent, the highest level since 1993...

Revisions for September and October increased job losses by 199,000. The October figure was revised to 320,000 from the previous estimate of 240,000. November was the 11th consecutive drop in payrolls...

The foundering job market is also aggravating the three-year housing slump. One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter, the Mortgage Bankers Association reported today. The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a three-decade survey.

The job losses suggest that the recession isn't going to be short and shallow.

“It’s unbelievable,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. “We’re well on our way to the worst recession of the postwar period.”

He could be right; investors don't seem to believe it. US stocks were up strongly by the end of the day, the S&P 500 gaining 3.7 percent. An 8.6-percent surge in financials after Hartford Financial Services increased its profit forecast seems to have been a key factor though.

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