Skittish employers slashed 533,000 jobs in November, the most in 34 years, catapulting the unemployment rate to 6.7 percent, dramatic proof the country is careening deeper into recession.
The new figures, released by the Labor Department Friday, showed the crucial employment market deteriorating at an alarmingly rapid clip, and handed Americans some more grim news right before the holidays. The net loss of more than a half-million jobs was far worse than analysts expected.
As companies throttled back hiring, the unemployment rate bolted from 6.5 percent in October to 6.7 percent last month, a 15-year high.
"These numbers are shocking," said economist Joel Naroff, president of Naroff Economics Advisors. "Companies are sharply reacting to the economy's problems and slashing costs. They are not trying to ride it out."
The unemployment rate would have moved even higher if not for the exodus of 422,000 people from the work force. Economists said many of those people probably abandoned their job searches out of sheer frustration. In November 2007, the jobless rate was at 4.7 percent.
The U.S. tipped into recession last December, a panel of experts declared earlier this week, confirming what many Americans already thought.
Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people increased by 2.7 million and the jobless rate rose by 1.7 percentage points. More evidence that the labor pain is far from over came Friday when General Motors Corp. said it will lay off another 2,000 workers as it cuts shifts at three car factories starting in February due to slowing demand for their products.
President George W. Bush, who used the word "recession" for the first time to describe the economy's state, pledged Friday to explore more efforts to ease housing, credit and financial stresses.
"There is still more work to do," Bush said. "My administration is committed to ensuring that our economy succeeds."
President-elect Barack Obama said the dismal job news underscored the need for forceful action, even as he warned that the pain could not be quickly relieved.
"There are no quick or easy fixes to this crisis ... and it's likely to get worse before it gets better," Obama said. "At the same time, this ... provides us with an opportunity to transform our economy to improve the lives of ordinary people by rebuilding roads and modernizing schools for our children, investing in clean energy solutions to break our dependence on imported oil, and making an early down payment on the long-term reforms that will grow and strengthen our economy for all Americans for years to come."
To provide relief, the Bush administration will continue to concentrate on ways to bust through a credit jam that is feeding prominently into the economy's problems, Commerce Secretary Carlos Gutierrez told The Associated Press in an interview. "We're going to stay focused on that like a laser," he said.
Elsewhere Friday, the Mortgage Bankers Association said a record one in 10 American homeowners with a mortgage were either at least a month behind on their payments or in foreclosure at the end of September. The percentage of loans at least a month overdue or in foreclosure was up from 9.2 percent in the April-June quarter, and from 7.3 percent a year earlier.
On Wall Street, stocks slid. The Dow Jones industrials were down 130 points in afternoon trading.
Job losses last month were widespread, hitting factories, construction companies, financial firms, retailers, leisure and hospitality, and others industries. The few places where gains were logged included the government, education and health services.
The loss of 533,000 payroll jobs was much deeper than the 320,000 job cuts economists were forecasting. The rise in the unemployment rate, however, wasn't as steep as the 6.8 percent rate they were expecting. Taken together, though, the employment picture clearly darkening.
The job reductions were the most since a whopping 602,000 positions were slashed in December 1974, when the country was in a severe recession.
All told, 10.3 million people were left unemployed as of November, while the number of employed was 144.3 million.
Gary Cope, 33, this week lost his communications job at Roanoke, Va.-based high-tech research and development company Luna Innovations Inc.
Cope was called into a meeting first thing Thursday morning with two administrators and a human resources representative. Their message: He was being laid off, for financial reasons, effective immediately.
He left with a box of his belongings and about two months' severance. As Cope walked out the door, all he could think was, "I have a 3-year-old son and I'm a single dad."
"I came home and did my initial pity party, then I got myself together, talked to my family and went right to work" rewriting his resume and sending it out, Cope said. "My family has been very supportive, they've let me know I'll get through this and they won't let me drown."
Job losses in September and October also turned out to be much worse. Employers cut 403,000 jobs in September, versus 284,000 previously estimated. Another 320,000 were chopped in October, compared with an initial estimate of 240,000.
Employers are slashing costs as they cope with sagging appetites from customers in the U.S. and in other countries, which are struggling with their own economic troubles.
The carnage — including the worst financial crisis since the 1930s — is hitting a wide range of companies.
In recent days, AT&T Inc., DuPont, JPMorgan Chase & Co., as well as jet engine maker Pratt & Whitney, a subsidiary of United Technologies Corp., and mining company Freeport-McMoRan Copper & Gold Inc. announced layoffs.
Fighting for their survival, the chiefs of Chrysler LLC, General Motors and Ford Motor Co. returned to Capitol Hill Friday to again ask lawmakers for as much as $34 billion in emergency aid.
Workers with jobs saw modest wage gains. Average hourly earnings rose to $18.30 in November, a 0.4 percent increase from the previous month. Over the year, wages have grown 3.7 percent, but paychecks haven't stretched that far because of high prices for energy, food and other items.
Worn-out consumers battered by the job losses, shrinking nest eggs and tanking home values have retrenched, throwing the economy into a tailspin. As the unemployment rate continues to move higher, consumers will burrow further, dragging the economy down even more, a vicious cycle that Washington policymakers are trying to break.
Federal Reserve Chairman Ben Bernanke is expected ratchet down a key interest rate — now near a historic low of 1 percent — by as much as a half-percentage point on Dec. 16 in a bid to breathe life into the moribund economy. Bernanke is exploring other economic revival options and wants the government to step up efforts to curb home foreclosures.
Treasury Secretary Henry Paulson, whose department oversees the $700 billion financial bailout program, also is weighing new initiatives such as tapping the second half of that rescue money to ease the economic crisis.
Obama, who takes office on Jan. 20, has called for a massive economic recovery bill to generate 2.5 million jobs over his first two years in office. House Speaker Nancy Pelosi, D-Calif., has vowed to have a package ready on Inauguration Day for Obama's signature.
The measure, which could total $500 billion, would bankroll big public works projects to create jobs, provide aid to states to help with Medicaid costs, and provide money toward renewable energy development.
At 12 months and counting, the recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns. The current recession might end up matching that or setting a record in terms of duration, analysts say.
The 1981-82 recession was the worst in terms of unemployment since the Great Depression. The jobless rate rose as high as 10.8 percent in late 1982, just as the recession ended, before inching down.
Given the current woes, the jobless rate could rise as high as 8.5 percent by the end of next year, some analysts predict. Still, the unemployment rate often peaks after a recession has ended. That's because companies are reluctant to ramp up hiring until they feel certain the recovery has staying power.