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Saturday, 7 March 2009

Economy in 'Free-Fall': Unemployment Rate Surges to 8.1%, Highest in 25 Years

Another 651,000 U.S. jobs were lost in February, the Labor Department said today, bringing the total number of jobs lost since the recession began in December 2007 to 4.4 million. The unemployment rate jumped to 8.1%, it's the highest level in 25 years.

Our guest, Nariman Behravesh, chief economist with IHS Global Insight, says another few months of 600k to 700k jobs lost per month is likely.

Before the economy bottoms (hopefully in late 2009), America could shed another 3.5 million to 4 million more jobs, bringing the unemployment level to a peak of 10% to 11%, he says. The economy and job market is in a "free-fall."

More broadly, the economist sees negative growth for a few more months (at least), with a best-case scenario of 1.5 percent to 2 percent GDP growth in 2010. But wait. The Obama administration projects the economy will grow 3.2 percent next year. "Too optimistic," says Behravesh, author of Spin-Free Economics.

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