NOAH ADAMS, host:
From the studios of NPR West, this is Day to Day. I'm Noah Adams.
ALEX COHEN, host:
And I'm Alex Cohen. Coming up, the federal government bailed out Wall Street, but the rescue program hasn't done much for the rest of the economy. The incoming Treasury secretary wants to get some of that $700 billion to small businesses and homeowners. We'll have more on that in a moment.
ADAMS: But first, economists were expecting a dismal unemployment report for December; that's just what they got. The Labor Department said today that U.S. businesses eliminated more than half a million jobs from payrolls last month. The official unemployment rate went from 6.8 to 7.2 percent. NPR's Jim Zarroli joins us now. Jim, the U.S. economy has been in a recession for a year. What does this report tell us about how severe it's going to be?
JIM ZARROLI: Well, this was a terrible report. There were job cuts everywhere you looked, and if you talk to economists, they will say that the really frightening thing here is the speed with which the job market is slowing. The economy lost 2.6 million jobs last year, which is the most since 1945. And that alone is just a stunning number, but the decline really accelerated at the end of the year. I talked to Nariman Behravesh of IHS Global Insight. Here's what he had to say.
Dr. NARIMAN BEHRAVESH (Chief Economist, Global Insight): And if you look at the last four months of 2008, we lost almost two million jobs - 1.9 million to be exact - and it looks like we're in a freefall when it comes to the economy and the jobs market. ZARROLI: So, in other words, we were already in a recession last year, but until, say, September, you know, there were pockets of strength in the economy - the service sector was still pretty strong - but then around the middle of September, you know, that was really a turning point in retrospect. And now, we're seeing much more widespread job losses. Since then, you know, we've seen losses everywhere except health and education, and even there, the growth has been pretty weak.
ADAMS: Well, what happened in September? What was going on there?
ZARROLI: Well, economists are in unusual agreement on this score. That was when Lehman Brothers was allowed to collapse, and that just sent the financial markets into a tailspin. Here was this unthinkable thing that was happening, and you had this just sudden collapse of confidence in the markets. People were afraid to lend; the commercial paper market deteriorated so companies couldn't get credit. The fear really just began to feed on itself, and that's when companies stopped hiring.
ADAMS: How do you get companies to start creating jobs and feeling good about things and able to borrow money and get it rolling again?
ZARROLI: Well, that's hard to answer, of course. The Treasury Department and the Fed have done a number of unprecedented things, which we're, you know, familiar with, like buying stock in banks, all aimed at shoring up the credit markets. It hasn't stopped the economy from worsening, but you could argue that, you know, things might have been a lot worse if they hadn't done that. But I think right now a lot of people are pinning their hopes on this big stimulus plan that President-elect Obama is talking about.
ADAMS: Yeah, that's a lot of money. And what's the timing there? If it's going to work, we're going to know when?
ZARROLI: You know, that depends on when it's passed. Nariman Behravesh talked about that. He said that if Congress and the Obama administration come in, they agree on something that's big and bold enough, you know, quickly, we may start to see this hemorrhage in the job market and - by maybe next summer, and then maybe we could see some job growth by the end of the year.
Dr. BEHRAVESH: But if there's any kind of delay in getting this economy kick started via fiscal stimulus, if it drags on, let's say, the discussion and the debate drags on into March or April or something like that, then this thing could go on for a long time.
ZARROLI: Now, you're already starting to see some disagreement about the stimulus package between Congress and the president-elect. President-elect Obama wants a lot of spending for infrastructure projects but also tax cuts; some Democrats don't like that. So, there's a question now, can they resolve their differences and get something done fast enough? But there's a lot of pressure on Washington right now, so we'll have to see what happens.
ADAMS: NPR's Jim Zarroli talking with us from New York. Thanks, Jim.
ZARROLI: You're welcome.
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