Nearly 600,000 workers in the United States lost their jobs in January, the biggest monthly job loss since 1974. The U.S. unemployment rate shot up to 7.6 percent, its highest level since 1992.
The 598,000 jobs that were lost in January were more than what markets anticipated. At the White House President Obama spoke of the grim December numbers.
"That is the single worst month of job loss in 35 years," he said. "The Department of Labor also adjusted their job loss numbers for 2008 upwards, and now report that we have lost 3.6 million jobs since this recession began."
Mr. Obama said the worsening recession makes it essential that Congress act quickly to stimulate the declining economy. Financial markets rallied on the job report.
Robert Reich, a University of California economics professor who was labor secretary in the Clinton administration, said that is because markets assume that the nearly $1 trillion congressional spending and tax cut program will soon be approved.
"I think what is happening actually is that investors are very, very optimistic that a stimulus package is going to be passed," he said. "Because these job numbers are so bad that they are going to catapult the Senate into taking action today and that stimulus package is probably going to be signed [into law] within ten days."
At midday the Dow Jones industrial average was up 160 points, or about two percent.
The economic downturn in the United States began in December 2007, five months after credit froze up in financial markets because of bad loans in the U.S. mortgage market.
The downturn steadily gained momentum towards the end of 2008 when economic activity declined at a nearly four percent annual pace. The pace of job losses has also accelerated as nearly two million Americans lost their jobs in just the past three months.