FINWIRE®

US loses 2.6 million job in December 2008. What’s next?

January 15th, 2009

Including december job losses the US economy lost nearly 2.6 million jobs in 2008. Of those, 1.9 million vanished in just the final four months of the year . That’s the highest annual decline since the end of World War 2.

Employers start doing the math and they see that there is no way to reduce expenses than to fire employees. As a result, in August 2008 jobless rate equaled 6,2%, in December 2008 it reached 7,2%.

Average work week plunged to the all-time low 33.3 hours a week, well below the expectations. It’s a leading signal of the future job cuts. John Herrmann of Herrmann Forecasting predicts that next month number of job cuts can be twice as high as in December 2008.

However, we have to say that stock indices may start to rise before the unemployment rate reaches its peak as it was the case in 2002.

It’s possible to explain such situation by suggestion that a lot of people came back to labour force after recession period of 2000-2002 ended. While they were looking for jobs they were counted as unemployed.

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