Transcripts

The Unemployment Rate Climbs Higher

SUSIE GHARIB: The number of Americans out of work is now at its highest level in 16 years. The Labor Department said today the nation's unemployment rate jumped to 7.2 percent last month, up from 6.8 percent in November. And American businesses cut payrolls by more than half a million workers in December, bringing the total number of jobs lost in 2008 to 2.6 million, the largest annual decline since 1945. As Scott Gurvey reports, the employment outlook for 2009 can be summed up in one word.

BRIAN FABBRI, CHIEF ECONOMIST, BNP PARIBAS: Dreadful. There's not much more I can add to that. It's just, we're in one of the most severe collapses in economic activity that we've experienced in the last 50 years.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: That's Brian Fabbri, chief economist of BNP Paribas and you know the subject. It appears many of America's factories virtually stopped production in the fourth quarter and laid off workers. Construction also ground to a standstill. And the service sector shed jobs at a record pace. Economist David Greenlaw of Morgan Stanley says the increasing speed of the job cuts indicates the recession will last well into next year.

DAVID GREENLAW, CHIEF U.S. FIXED INCOME ECONOMIST, MORGAN STANLEY: We lost almost two million jobs in the last four months of the year alone. So we're going to see, I think, the pace of job loss very close to that over say first half of 2009. So you're looking at job loss in 2009 that could approach four million or so for the year.

GURVEY: As recent reports on retail activity show, we are afraid of losing our jobs and are saving rather than spending and many economists believe even government moves to spur spending will take a while to kick in.

GREENLAW: With the stimulus in the pipeline, with the stimulus that's likely to be enacted over the course of coming months, I think we will see the markets and the economy begin to stabilize, but it's not going to happen right away. We're going to see these types of employment reports I think for the next several months.

GURVEY: And that's one of the more optimistic opinions. Some expect the unemployment rate to reach levels not seen since 1982.

FABBRI: I think the unemployment rate probably goes up beyond 9 percent during the course of this year, stays there in 2010. I think we'll probably lose another two-and-a-half to three million jobs over the course of 2009 and this includes an estimate of a very significant fiscal stimulus package being passed by the Congress early in 2009.

GURVEY: President-Elect Obama has already called for a plan to create as many as three million jobs this year. That would only replace the jobs lost last year. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.