Consumers are spending less and saving more, while companies have announced tens of thousands of job cuts for 2009 and beyond.
The economy lost 3.6 million jobs since the recession started in December 2007, half of those losses in the past three months. The tally of lost jobs for the January 2009 period was 598,000.
In Detroit, Chrysler LLC said it would idle two Michigan plants for at least a week. Both Chrysler and General Motors Corporation are expected to propose shuttering several facilities as part of the viability plans they are set to deliver to the U.S. government later this month.
This recession's job losses now total about 2.6% of employment with some economists predicting unemployment could hit double digits later this year. The recession has cut across regions and industries with significant cuts in the service sector---a troubling sign that reflects the sharp contraction in spending among business and consumers. The service sector, which accounts for around 85% of jobs, lost 279,000 jobs in January 2009. Worrying to economists is the fact that during most recessions, service-related jobs tend to hold up.
The unemployment number, measuring only those actively looking for jobs, is considered a lagging indicator because it reflects companies' reaction to the worsening economy. But in a sign of further weakness, the broadest gauge of unemployment (that includes people who have been forced to take part-time work or who dropped out of the labor force altogether) soared to 13.9% in January.
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Source: The Wall Street Journal, February 7, 2009