2008 Job Losses of 2.4 Million a Six-Decade High

By Scott Lee

The number of Americans collecting unemployment benefits surged to a 26-year high as the labor market worsened in a yearlong recession. The government may report tomorrow the economy lost another 510,000 jobs in December, bringing the 2008 total to a six-decade high of 2.4 million, according to economists. The unemployment rate probably jumped to 7 percent, the highest level since 1993.

Economists last month projected the rate will climb to 8.2 percent by the end of 2009, signaling job cuts are likely to keep rising. On the conservative end economists predict that the jobless rate may eventually exceed 10 percent. Yet others predict unemployment rates as high as 11% by mid 2009, and possibly near 20% within the next two years, rivaling rates of the Depression years.

Major banks, investment firms and insurance companies requested and received loans or bailouts last year totaling well over $1 trillion. Yet credit markets remain basically closed to new borrowing as banks hoard the bailout cash, fully negating stated intentions of the administration and officials. The Federal Reserve board is refusing congressional inquiries as where and how much of this money has been spent, resulting in total lack of accountability and oversight with taxpayer funds.

As GM and Chrysler last month sought billions of dollars in loans to keep operating, the major U.S. automakers shutdown plants slashing production to clear out inventories. Automakers were among companies shutting down operations last year earlier than the government anticipated, leading to a jump in claims when the figures are adjusted for seasonal variations.

Chrysler idled all 30 of its assembly plants on Dec. 17 for at least a month, while Ford said 9 of 15 North American factories would shut for the first week in January. GM announced output cuts Dec. 12 that affected 20 plants. Firings are rippling from manufacturers and construction companies to service industries as demand falters. EMC Corp., the world’s biggest maker of storage computers, said it will cut about 2,400 positions, about seven percent of its workforce. Retailers including Talbots Inc. and Sears Holdings Corp. may close stores in the first half of the year, according to the International Council of Shopping Centers, as job losses and economic concerns keep consumers from the shops.

Obama's Plan

“I don’t believe it’s too late to change course, but it will be if we don’t take dramatic action as soon as possible,” Obama said in the address, delivered at George Mason University in Fairfax, Virginia. “If nothing is done, this recession could linger for years.” Obama has pledged his plan will save or create 3 million jobs over the next two years. His plan to double alternative energy output, updating 75% of Federal Building to be more energy efficient, moderizing the infrastructure would employ many over the next 2 years. But how will these projects be funded?

In Obama's job creatation plan an estimated 80% would be Public/Govenment jobs and 20% Private sector. The plan sounds good on paper, but it also increases the size of an already oversized Government. With the new Congress appearing almost eager to continue the massive spending habits of the past adminstration. A new bailout package reportedly in the $750 billion to $1 trillion range is in teh works. This has many projecting a 2009 budget deficit of $1.7 trillion.

The new adminsitration should be cautious of the possiblity that as more spending is authorized to artificially simulate the economy to prop up the market. It also will add to an already out of control national debt. The question is, after sheding 2.4 million jobs in 2008. Will the saving or creating 3 million jobs over 2 years be enough to offset the negative ramifications (currency devaluation and hyper-inflation) that go with the creation of all this new money and lowering interest rates?