Monthly loss of jobs worst in 34 years

The recession deepened dramatically in November as U.S. companies slashed 533,000 jobs from their payrolls during the month. It was the largest monthly drop since December 1974, the Labor Department reported Friday.

The report set the stage for a massive fiscal stimulus package from the incoming Obama administration, analysts said.

The unemployment rate jumped from 6.5 percent to 6.7 percent, the highest jobless rate in more than 15 years. Goldman Sachs predicts unemployment will hit 9 percent by the end of next year.

The Labor Department also revised previously reported job losses for September and October, increasing them by a total of 199,000.

Following payroll cuts of 403,000 jobs in September and 320,000 jobs in October, the economy has now shed 1.26 million jobs during the past three months.

“It is clear this economy is now deteriorating with frightening speed and ferocity,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “The numbers are truly horrific —

The bursting of the housing bubble has resulted in millions of mortgage defaults, which generated more than $650 billion in losses so far for commercial and investment banks. Housing prices continue to fall at an accelerating rate, jeopardizing more mortgages and resulting in more foreclosures and greater losses for banks and investors.

Nouriel Roubini, a New York University economist who predicted the bursting of housing bubble and the resulting crises in the financial and credit markets, estimates that credit losses resulting from the housing meltdown will exceed $2 trillion.

Ten percent of American homeowners during the third quarter were either delinquent by 30 days or more on their mortgage payments (6.99 percent) or had already entered foreclosure (2.97 percent), the Mortgage Bankers Association said in a report issued Friday. Both were records in a survey that is nearly 30 years old.

The U.S. recession, as Mr. Roubini predicted more than a year ago, clearly has gotten much worse in recent months.

“A very ugly set of numbers tells us that the job market has collapsed in the last three months,” said Stuart Hoffman, chief economist of PNC Financial Services Group in Pittsburgh. “The economy has become a whirlpool that is sucking down everything from the job market to the stock market.”

Employment fell for the 11th month in a row. But November’s payroll plunge far exceeded the expectations of economists.

November’s job losses and the September and October revisions were “much worse than were expected and represent wholesale capitulation. The threat of widespread depression is now real and present,” said Peter Morici, a business professor at the University of Maryland.

Mr. Morici took issue with the reported jobless rate of 6.7 percent in November. “Factoring in discouraged workers, unemployment is closer to 8.7 percent,” he said. “Add in part-time positions that cannot find full-time employment, and the hidden unemployment rate is nearly 13 percent,” which he expects will eventually approach 20 percent.

The private sector has lost 2.12 million jobs so far this year, while the government sector has added 211,000 jobs. Government payrolls, which expanded by 7,000 workers in November, have declined only one month (September) this year.

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