January 9th, 2009
12:18 PM ET

Financial Dispatch: 2.6 million jobs gone

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/01/09/t1home.jobs2.gi.jpg caption="Job seekers line up for a career fair in Concord, California. (Getty Images)"]

Andrew Torgan
CNN Financial News Producer

The U.S. economy lost 524,000 jobs in December, bringing the total number of jobs lost in 2008 to 2.6 million. That’s the highest yearly total since 1945 when soldiers began returning home and factories started to wind down wartime operations. And the unemployment rate rose to 7.2% from 6.7% in November. That’s the highest level in 16 years.

Stocks actually opened higher following that jobs report as even though the numbers were dismal, many people thought it was going to be a lot worse. But the rally was short-lived and the Dow quickly turned lower by triple digits.

President-elect Barack Obama's economic team is considering an overhaul of the $700 billion Wall Street bailout program. When Congress approved the bailout in October, it gave the Treasury Dept. access to half the money. Treasury has not asked Congress to release the other half of the money and Congress has not moved to release it. Lawmakers are unhappy the program has failed thus far to ease the nation's credit crunch or help revive the economy. In light of those concerns, Obama’s team is considering a number of ways to alter the program, including:

– Allowing bailout money to be used to help some homeowners facing foreclosure.

– Freeing up the credit markets for loans to people, local governments and small businesses.

– Having the government take a bigger stake in financial firms by putting more money into them. In exchange, there would be greater limits on CEO compensation and more taxpayer protections.

– Consider creating a new bureau within Treasury for the bailout. Its goal would be to ensure greater oversight and better management.

Why is the Obama team considering such an overhaul? A report expected today says the Treasury Dept. has failed to reveal its strategy for stabilizing the financial system, failed to answer questions asked by a government watchdog and has done nothing to help struggling homeowners. A draft report issued by the five-member Congressional oversight panel says there appear to be “significant gaps” in Treasury's ability to track hundreds of billions of dollars of taxpayer money.

Gas prices are up for the 10th straight day. Gas rose 2 cents to $1.782 a gallon. The current national average is now $2.33 below the record high price of $4.114 that AAA reported on July 17, 2008. Two states have regular unleaded gas prices of $2 and higher. 48 states and the District of Columbia have regular unleaded gas prices below $2. The most expensive gas in Alaska ($2.524), while the cheapest is in Wyoming ($1.450)

Crude oil fell below $40 a barrel after the jobs report fueled concerns about weaker demand for petroleum products in an ailing economy.

And finally… could Triple H, Hacksaw Jim Duggan or the Wild Samoans find themselves joining the ranks of the unemployed? World Wrestling Entertainment, the company behind “Raw” and “Friday Night SmackDown,” is cutting about 10 percent of its workforce as part of an overall cost-cutting plan.

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Filed under: Andrew Torgan • Bailout Turmoil • Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (5 Responses)
  1. nina

    With 2.6 million jobs lost in 2008, wouldn't you like to know how many of those jobs came from federal government positions? I'm sick of hearing our federal employees talking about how Americans are going to have to "do their part." How about asking government to cut 7.2% of their positions to match the unemployment rate the rest of us are living with?

    January 9, 2009 at 8:18 pm |
  2. TK

    In 1965 a box of Kraft macaroni and cheese sold for about a nickel a box and the minimum wage was about $1.00 per hour. Today that box sells forabout $.85 per box. That means the minimu wage would have to be about $17.00 per hour.

    In the 1980's the top merit budget was 3% while the underlying rate of inflation soared 15 to 20%. No wonder we no longer have a middle class and that we have so many working poor and uninsured!

    Congress switched from a full employment goal in the late 70's to that of a planned economy! Great planning! George Bush, former prez, gave the CIA responsibility for economic planning! Fascist countries historically were typified by oligoplistic markets which consisted of a few huge companies in partnership with the national government! Sounds familiar!

    Prior to 1980 the average exec made 35 times thier average employee! That multiple is now in the 1,000's!

    Record numbers of Harley motorcycles, Mercedes, BMW's, Jaguars, etc and airplanes were made about the same time! Trekkle down was plugged along the line as greed by the rich laundered most all of it!

    January 9, 2009 at 7:53 pm |
  3. Annie Kate

    Seems like everyone is laying off; I'll be glad to see Obama's economic recovery plan passed and some jobs created. If people can just find work I think confidence will build up and people will start spending again and the economy will right itself. I hope that Obama's plan is more sound than this last economic bailout package because I hate to think of how bad it could get if its not.

    January 9, 2009 at 7:35 pm |
  4. Albert Marchione

    Tax cuts are not the solution to the financial crisis. Tax credits for individuals that buy American products (such as autos) would direct the economy to work for America. Specific Tax credits for the Auto industry along with low interest loans and some concessions from the UAW might make American Auts competitive again.

    January 9, 2009 at 7:07 pm |
  5. Isabel, RJ, Brazil

    Perhaps the solution is a momentary professional qualification. Those who lose their jobs must go through training and retraining. Only then can find another activity and take a new wave in modern competitive labor market. The unemployed can’t be expecting new opportunity to occupy the same place he occupied before the resignation, because that same wave, or better, that function may cease to exist. Whoever wants to return to the labor market should recycle, seeking a place in another area or branch of activity, it is essential, it must be prepared.

    January 9, 2009 at 4:36 pm |