UNEMPLOYMENT RATE JUMPS TO 8.1%

The unemployment rate for the United States jumped up to 8.1 percent in February, the highest since late 1983, as cost-cutting employers slashed 651,000 jobs. Both figures were worse than analysts expected. The net loss of 651,000 jobs in February came after even deeper payroll reductions in the prior two months, according to revised figures. The economy lost 681,000 jobs in December and another 655,000 in January.

Employers are shrinking their work forces at alarming clip and are turning to other ways to slash costs — including trimming workers' hours, freezing wages or cutting pay — because the recession has eaten into their sales and profits.

One of the major differences from other Recessions has been that the job losses are across the board. Construction companies eliminated 104,000 jobs. Factories axed 168,000. Retailers cut nearly 40,000. Professional and business services got rid of 180,000, with 78,000 jobs lost at temporary-help agencies. Financial companies reduced payrolls by 44,000. Leisure and hospitality firms chopped 33,000 positions.

This recession (Which may actually be a depression) has fallen into a vicious cycle in which all the economy's negative problems feed on each other, worsening the downward spiral.

Unemployment Rate Hits 7.6% -- Worse Than Expected.

The new unemployment numbers are out:

January job losses: 598,000

Job losses from Nov-Jan: 1.8 million

Unemployment rate: 7.6%

Unemployed workers: 11.6 million

In a word they are ugly.

So while Republicans continue to play political games with the future of this nation, the number of Americans who have lost their jobs is skyrocketing. The Numbers were worse than expected:

U.S. employers slashed 598,000 jobs in January, the deepest cut in payrolls in 34 years as the national unemployment rate shot up to 7.6 percent, according to a Labor Department report on Friday that underlined a deepening recession.

January's job losses were worse than the 525,000 that had been forecast by Wall Street economists, who also had expected the unemployment rate to come in lower at 7.5 percent. The bleak employment data is certain to be cited by the Obama administration as a fresh reason for Congress to speed up debate over a multibillion-dollar package of proposals to try to stimulate economic activity.

Bad News on the Economy - Again

Brutal news on the job market yesterday, with six major corporations announcing combined layoffs of over 71,400 people. One of the companies was construction machinery manufacturer Caterpillar (CAT, Fortune 500) said Monday it will cut 20,000 jobs amid a "very challenging global business environment." Another company was Pfizer (PFE, Fortune 500) which said in an earnings report it would cut 10% of its staff of 81,900 and close five of its manufacturing plants. And a second round of cuts will shed about 15% of employees from the combined Pfizer/Wyeth staff of 120,000. That makes a total of 26,000 jobs lost. The company already cut 4,700 jobs in 2008.

Sprint Nextel Corp. (S, Fortune 500) will cut a total of about 8,000 jobs by March 31, the company said in a release. The telecommunications company's plan is to reduce internal and external labor costs by about $1.2 billion on an annual basis.

Home Depot (HD, Fortune 500), the world's largest home improvement retailer, announced Monday it will eliminate its EXPO design center business and cut 7,000 associates, or approximately 2% of the company's total workforce. The company blamed a lack of demand for big ticket design and decor projects.

Texas Instruments (TXN, Fortune 500) said it will slash its workforce by 3,400 employees to cope with weak demand and the slowing economy. More than half of those cuts will be layoffs while "voluntary retirements and departures" will make up the rest.

The cuts mark a horrific start to the week, and a brutal start to 2009. In the previous week, around 40,000 cuts were announced across multiple industries.

Glad that the Republicans have decided to be an obstacle to the stimulus plan.

U.S. Job Report Is Horrible

Reports came out today that the U.S. economy lost over 524,000 jobs in December. December folks is a month where there is usally an up tick in hiring as stores bring on seasonals, instead we lost over half a million jobs. This was the 12th straight month of decline. Job losses in both October and November turned out to be deeper than previously estimated. Revised figures showed that the employers slashed 584,000 positions in November and another 423,000 in October. Job losses were widespread in December. Construction companies slashed 101,000, and factories axed a whopping 149,000 jobs. Professional and business services got rid of 113,000 jobs. Retailers eliminated nearly 67,000 jobs, and leisure and hospitality reduced employment by 22,000. That more than swamped gains in education and health care, and the government.

Nearly 2.6 million jobs were lost in 2008, with 1.9 million destroyed in just the past four months.

It’s the biggest job loss in any calendar year since 1945. The unemployment rate rose to 7.2 percent, the highest since early 1993 — just after the last Bush left office.

USA Today charts the job losses over the past year:

Last Look at 2008 and the Economy

It is clear that 2008 was not a very good year and it is official that the current U.S. recession started already in December 2007.

So how far are we into this recession that has already lasted longer than the previous two (1990 and 2001 recessions lasted 8 months each)?

I believe the U.S. economy is probably only half way through this recession. I believe that this will be the longest and most severe recession in the post World War II period.

Even if Barack Obama is able to get the Republicans to back his stimulus package, the U.S. GDP will continue to contract throughout 2009 for a cumulative output loss of 5% and a recession that will last close to two years.

One last look at 2008 will reveal a very weak fourth quarter with GDP growth contracting -6%, in the wake of a sharp fall in personal consumption and private domestic investments.

There is a good chance of real GDP growth contraction playing out through the year as follows: Q1 2009 -5%; Q2 2009 -4%; Q3 2009. -2.5%; Q4 2009 -1%, adding up to a yearly real GDP growth of -3.4% for the U.S. in 2009.

The U.S. consumer is at the center of the dynamics that will play out in the real economy in 2009, and it will not be pretty. Currently personal consumption in the U.S. makes up over two-thirds of all aggregate demand. So with indications that personal consumption will continue to contract throughout 2009 quite sharply as a result of negative wealth effects from housing and equity market losses, the disappearance of home equity withdrawal from the second half of 2008, mounting job losses, tighter credit conditions and high debt servicing ratios (the debt to income ratio went from 70% in the 90s, to 100% in 2000 to 140% now).

The wealth losses for households related to the fall in home prices are roughly $4 trillion so far, and are clearly bound to increase further as home prices continue to fall –eventually reaching the $6-8 trillion range.

This retrenchment of the U.S. consumer will result in a painful rebalancing in the economy that will eventually restore the saving rate of a decade ago.

Economy wide job cuts are expected, with big corporations and small enterprises, residential and commercial construction, financial services and manufacturing continuing to shed jobs at a strong pace. Moreover with structural shifts in the economy since the last recession, job losses this time will be more severe in the service sector, including retail, business and professional services and leisure and hospitality. So I am afraid that lay-offs are bound to continue. Unemployment might peak between 9 and 10% in 2010. Almost two years after the recession began we will still be feeling the effects on jobs. This will not even count those discouraged workers who leave the work force and are no longer eligiable for unemployment.

This could all lead to deflationary pressure in the economy.

Citigroup set to cut 75,000 jobs

US bank Citigroup announces plans for up to 75,000 job cuts, up from a previously announced total of 23,000. Citigroup said in a statement the cuts represented a reduction of about 20% of its staff, leaving it with 300,000 jobs worldwide "in the near term".

Citigroup has lost more than $20bn in the past year because of the global financial crisis. It has posted four straight quarterly losses and some analysts believe the bank will not make a profit again until 2010.