Rich Miller and Bob Willis
Saturday, Dec 06, 2008
The U.S. economy may be headed for its deepest and longest recession since World War II as mounting job losses take their toll on consumer confidence and spending.
Employers cut payrolls last month at the fastest pace in 34 years as the unemployment rate rose to 6.7 percent, the highest level since 1993. The 533,000 drop brought cumulative job losses this year to 1.91 million, the Labor Department said yesterday in Washington.
“Almost all businesses are in survival mode, and they’re slashing payrolls and investments just to conserve cash,” Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, said in a Bloomberg Television interview yesterday. “We’re in store for some big job losses.”
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The plunge may spur incoming President Barack Obama to come up with a fiscal stimulus package larger than the $700 billion plan some economists advocate. Yesterday’s figures also may add to pressure on the Federal Reserve to take further steps to revive credit and on lawmakers to bail out American automakers.
“There are no quick or easy fixes to this crisis, which has been many years in the making, and it’s likely to get worse before it gets better,” Obama said in a statement yesterday. “But now is the time to respond with urgent resolve to put people back to work and get our economy moving again.”
After falling in early trading in response to the employment data, stocks rallied yesterday on an increased profit forecast by Hartford Financial Services Group Inc. The Standard & Poor’s 500 index gained 3.7 percent to close at 876.07 in New York, still down 40 percent for the year to date.