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2008-12-05 07:35:48
By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer
1 hr 35 mins ago
WASHINGTON With the economy sinking faster, employers are giving more
Americans dreaded pink slips right before the holidays.
The Labor Department releases a new report Friday that's expected to show the
employment market deteriorated in November at an alarming clip as the deepening
recession engulfed the country.
After bolting to a 14-year high of 6.5 percent in October, the unemployment
rate likely climbed to 6.8 percent last month, according to economists'
forecasts. If they are right, that would mark the worst showing in 15 years.
Skittish employers, which have slashed 1.2 million jobs this year alone,
probably axed another 320,000 last month, economists forecast. If that estimate
is correct, it would represent the deepest cut to monthly payrolls since
October 2001, when the economy was suffering through a recession following the
Sept. 11 terrorist attacks.
Employers are slashing costs to the bone as they try to cope with sagging
appetites from customers in the United States as well as 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.
Just in recent days, household names like 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 Corp.
and Ford Motor Co. will return Friday to Capitol Hill to make a pitch to
lawmakers for the second straight day for as much as $34 billion in emergency
aid.
Worn-out consumers battered by 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 circle 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 breath 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, the overseer of a $700 billion financial
bailout program, is weighing new initiatives, too, even as his remaining days
in office are numbered.
President-elect Barack 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.
The United States tipped into recession last December, a panel of experts
declared earlier this week, confirming what many Americans already thought.
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 to as high as 8.5 percent
by the end of next year, some analysts predict. Projections, however, have to
be taken with a grain of salt because all of the uncertainties plaguing the
economy. 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.