msnbc.com staff and news service reports
updated 2/6/2009 4:10:26 PM ET 2009-02-06T21:10:26

Mass layoffs across almost every line of business catapulted the nation's unemployment rate to 7.6 percent in January and lent more urgency to Washington's attempt to quickly hammer out an economic stimulus package.

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Friday's data from the Labor Department was a laundry list of misery milestones: The most jobs lost in one month since 1974, the highest unemployment rate since 1992, the largest one-month drop in factory jobs since 1982 and the most jobs lost in 12 months since the goverment began keeping records in 1939.

The report showed the terrible toll the drawn-out recession is having on workers and companies. It also puts even more pressure on President Barack Obama to revive the economy.

"These numbers demand action. It is inexcusable and irresponsible for any of us to get bogged down in distraction, delay or politics as usual while millions of Americans are being put out of work," Obama said bluntly. "Now is the time for Congress to act."

He added that the current unemployment rate equals 3.6 million Americans who wake up wondering how they are going to pay their bills.

"If we don't do anything, millions more jobs will be lost," the president warned in remarks at the White House as he introduced a new Economic Recovery Advisory Board, headed by former Federal Reserve Chairman Paul Volcker.

The board will offer independent advice in regular briefings to the president, vice president and their economic team.

The nearly $1 trillion stimulus package is Obama's top legislative priority in his early presidency.

Bad as the report was, the stock market expected worse. Wall Street's major indexes rallied about 2 percent after the news on rising hope that the nation's deteriorating economy would spur lawmakers to swiftly pass the package.

Recession-battered employers eliminated a net 598,000 jobs in January, the most since the end of 1974. That was much worse than the 524,000 that economists expected. Job reductions in November and December also were deeper than previously reported.

With cost-cutting employers in no mood to hire, the unemployment rate bolted to 7.6 percent in January, the highest since September 1992. The increase in the jobless rate from 7.2 percent in December also was worse than the 7.5 percent rate economists expected.

All told, the economy has lost a staggering 3.6 million jobs since the start of the recession in December 2007. About half of the decline has occurred in the past three months.

"Companies are in survival mode and are really cutting to the bone," said economist Ken Mayland, president of ClearView Economics. "They are cutting and cutting hard now out of fear of an uncertain future."

Factories slashed 207,000 jobs in January, the largest one-month drop since October 1982, partly reflecting heavy losses at plants making autos and related parts. Construction companies got rid of 111,000 jobs. Professional and business services chopped 121,000 positions. Retailers eliminated 45,000 jobs. Leisure and hospitality axed 28,000 slots.

Those reductions swamped employment gains in education, health services and government.

Just in the 12 months ending January, an astonishing 3.5 million jobs have vanished, the most on record going back to 1939, although the total number of jobs in the economy has grown significantly since then.

The average work week in January stayed at 33.3 hours, matching the record low set in December.

With no place to go, the number of unemployed workers climbed to 11.6 million.

Over the past 12 months, the number of unemployed has increased by 4.1 million, and the unemployment rate has risen by 2.7 percentage points.

Job hunters also are facing longer searches for work.

The average time it took for an unemployed person to find any job — full or part time — rose to 19.8 weeks in January, compared with 17.5 weeks a year ago, underscoring the increasing difficulty the out-of-work are having in finding a new job.

An avalanche of layoffs is slamming the nation from a wide swath of employers.

Caterpillar Inc., Pfizer Inc., Microsoft Corp., Estee Lauder Cos., Time Warner Cable Inc., and Sprint Nextel Corp. are among the companies slicing payrolls. Manufacturers — especially carmakers — construction companies and retailers have been particularly hard hit by the recession. Retailers Talbots Inc., Liz Claiborne Inc., Macy's Inc. and Home Depot Inc. are all cutting jobs. So are Detroit's General Motors Corp. and Ford Motor Co.

Americans cut back sharply on spending at the end of last year, thrusting the economy into its worst backslide in a quarter-century. The tailspin could well accelerate in the current January-to-March quarter to a rate of 5 percent or more as the recession drags on into a second year and consumers and businesses burrow deeper under all the economy's negative forces.

Vanishing jobs and evaporating wealth from tanking home values, 401(k)s and other investments have forced consumers to retrench. And, in turn, companies are pulling back. It's a vicious cycle where all the economy's problems feed on each other, perpetuating a downward economic spiral.

Many economists predict the current quarter — in terms of lost economic growth — will be the worst of the recession.

With fallout from the housing, credit and financial crises — the worst since the 1930s — ripping through the economy, analysts predict up to 3 million jobs will vanish this year — even if Congress quickly approves the stimulus measure.

The economy's problems have proven stubborn. Despite record low interest rates ordered by the Fed and a raft of radical programs, including a $700 billion financial bailout, consumers and businesses face high hurdles to borrow money, foreclosures are skyrocketing, home prices are sinking and Wall Street remains on edge.

The Associated Press contributed to this report.

Video: 598,000 jobs lost in January

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