Monthly loss of jobs worst in 34 years

Companies shed more than 500,000 workers

By David M. Dickson (Contact) | Saturday, December 6, 2008

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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.

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