Job Draugt in US: 533,000 job Cut , biggest since 1974

by Amitjha | December 5, 2008 at 09:18 pm

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The job drought story has lost its impact, this is normal human tendency to ignore the generality, it is very repititive in nature.We always want to shut our cognitive gate when any thing that hurts comes in contact, untill the impact rattles your slumber.Same is the case of this massive firing spree in job market.

All companies have the reason to fire their trusted and efficient(till the crisis begun)employees in this financial crisis.Some of them grabbed it as an oppurtunity to shed some employee load even if they dont nave any great problem.

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.

“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.”

The plunge may spur incoming President Barack Obama to come up with an even bigger fiscal stimulus package than economists’ projections of about $700 billion. Today’s figures also will add to pressure on the Federal Reserve to take radical steps to revive credit markets and on lawmakers to bail out the auto companies.

“This is a huge downshift, much larger than we thought,” said Jared Bernstein, an economist at the Economic Policy Institute in Washington, who will be Vice President-elect Joe Biden’s chief economist in the new administration. “The upper bound on a stimulus package is going up, not down. As the hole gets larger, the amount you need to fill it gets larger.”

Company Plans

Payrolls are likely to keep sliding into next year as the collapse in credit and slump in spending hurt companies from General Motors Corp. to Citigroup Inc. and AT&T Inc. Legg Mason Inc., a Baltimore-based fund manager, said today it will eliminate 8 percent of its workforce.

Obama said in a statement the job loss demonstrates the “urgent” need for a recovery plan and offers an “opportunity to transform our economy” through investments in infrastructure and alternative energy technology. He aims to save or create 2.5 million jobs over two years.

An increase in a profit forecast by Hartford Financial Services Group Inc. sent shares of all 21 insurance companies higher, helping stocks reverse early losses. The Standard & Poor’s 500 index gained 3.7 percent to close at 876.07 in New York. Yields on Treasury securities rose.

Payrolls were forecast to drop by 335,000, according to the median estimate in the Bloomberg survey. The jobless rate was projected to rise to 6.8 percent.

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.