U.S. economy loses 524,000 jobs in December

 Mired in recession, the United States economy shed 524,000 jobs in December, pushing overall job losses for 2008 to 2.6 million.

That's basically the worst case scenario of many economists; they had projected job losses for December ranging anywhere from 475,000 to 525,000.

The unemployment rate in the U.S. jumped to 7.2 per cent, the Labour Department reported Friday.

The loss of 2.6 million jobs for the full year was the most since 1945. 

The massive decline in employment underscores the severity of the U.S. economic situation and the challenges that the administration of president-elect Barack Obama faces when he takes office on Jan. 20.

"I don't believe it's too late to change course, but it will be if we don't take dramatic action as soon as possible," said Obama on Thursday.  "If nothing is done, this recession could linger for years. The unemployment rate could reach double digits."

Obama said if the U.S. unemployment rate did reach double digits, the economy could fall $1 trillion US short of its full capacity, which would translate into more than $12,000 US in lost income for a family of four.

Royal Bank economist Dawn Desjardins said the jobless report is just the latest piece of bad news for the U.S. consumer, which spells bad news for the overall economy.

"The sharp pullback by the consumer as well as weakening business investment and souring demand for U.S. exports likely resulted in the economy contracting at the fastest pace since 1982," Desjardins said.

RBC forecasts that U.S. real gross domestic product fell at a 6.1 per cent annualized pace in the fourth quarter.