Half-million jobs vanish as economy deteriorates

WASHINGTON — An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in more than a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression.

Underscoring Friday's dismaying signs of a rapidly deteriorating economy, General Motors announced yet more job cuts, and a record number of homeowners — one in 10 among those who have a mortgage — were reported behind on mortgage payments or in foreclosure.

Somehow Wall Street found a silver lining, betting that so much bad news would force fresh government action to revive the foundering economy.

The Dow Jones industrial rose 259 points.

And with automobile sales dropping, payrolls plunging and manufacturing contracting, economists from across the political spectrum are raising the ante on how much the government should lay out in the form of an economic-stimulus package. Some are now calling for at least a $1 trillion boost.

Kenneth Rogoff, a Harvard University professor who was an adviser to Republican presidential candidate John McCain, and Joseph Stiglitz, a Nobel Prize winner who served in President Bill Clinton's White House, are among those who say President-elect Barack Obama should push for a package of that size.

They need a stimulus of $500 billion-to-$600 billion a year for at least two years to counter what is going to be a collapse in consumption, said Rogoff, a former chief economist at the International Monetary Fund.

Staring at 533,000 lost jobs, economists are anything but hopeful. Since the start of the recession last December, the economy has shed 1.9 million jobs, and the number of unemployed people has increased by 2.7 million — to 10.3 million now out of work.

Some analysts predict 3 million more jobs will be lost between now and the spring of 2010 — and that the once-humming U.S. economy could stagger backward at a shocking 6 percent rate for the current three-month quarter.

"The economy is in a free fall," said Richard Yamarone of Argus Research. "It is as if someone flicked off the switch on hiring."

"It's a mess," said Mark Zandi, chief economist at Moody's Economy.com. "Businesses, battening down the hatches, are concerned about their survival and are cutting workers."

President-elect Barack Obama said the crisis "is likely to get worse before it gets better," and no one was going to argue that point. Economists predicted the unemployment rate, which rose to a 15-year high of 6.7 percent in November, could soar as high as 10 percent before skittish employers begin hiring again.