U.S. jobless figures confirm economic meltdown

WASHINGTON, Dec. 5 (UPI) -- U.S. President George W. Bush is leaving office not with a whimper but a bang -- and it's the bang of a sinking U.S. economy.

The jobless figures for the U.S. economy in November, released Friday, were the worst in 34 years -- and far worse than analysts had expected. Even more devastating, the number of Americans who lost jobs in September and October was revised upward by nearly 200,000 from the figures previously released.

In November, 544,000 Americans lost their jobs, the worst figure since the 602,000 job losses in December 1974. In all, more than 1,250,000 Americans lost their jobs in the three months from September to November. Around 750,000 people had lost their jobs in the first eight months of the year, making a total job loss for the first 11 months of 2008 of around 2 million.

The upwardly revised figures make clear that the financial meltdown on Wall Street and spiraling dive of the stock market since then were the direct causes of the job-loss crisis. More than half a million jobs were lost in the months of September and October before the presidential election was held.

Oil prices and the U.S. stock market tumbled again after the figures were released. In the short term at least, U.S. Treasury bonds rose in price, probably also reflecting international investors' confidence that President-elect Barack Obama's economic team, widely hailed for its experience and pro-business savvy, will prove more competent and responsible than the outgoing Bush officials led by widely criticized Treasury Secretary Henry Paulson.

The deflation now ravaging the U.S. economy ironically is pulling oil prices way down, whereas the job-loss crisis of December 1974 was caused by them soaring sky high. Oil prices quadrupled during the winter of 1973-74 as the Organization of Petroleum Exporting Countries flexed its newfound cartel power. Today, however, oil prices have tumbled to less than one-third of their peak near $147 a barrel over the summer.

Before Friday's U.S. job-loss figures were announced, oil prices had fallen to $43.67 a barrel, more than $100 a barrel less than the record set in July and just more than half of what some OPEC members see as a right price -- $75 to $80 a barrel. Merrill Lynch now predicts the price of a barrel of oil will drop to $25. This at least may ease the global food shortage as it will take away the arguments the Bush administration used to justify its ruinously uneconomic and energy-inefficient corn ethanol policy that has allocated 20 percent of the annual U.S. corn harvest for ethanol fuel.

Other indicators confirm the same dire deflationary story. U.S. retail sales suffered the worst November in at least 30 years. Same-store sales were down 2.7 percent on last November, with department stores taking a whopping 13.3 percent hit.

Americans are keeping their credit cards in their wallets, which is good for the long term -- too much consumer debt was part of what got the U.S. economy into its current crisis -- but bad for the short term.

China has invested massively in the U.S. economy, and the silver lining on the dark deflationary cloud may be that Chinese investors and its State Bank may be reassured to retain hold of their massive U.S. investments and U.S. Treasury bond holdings because the gigantic domestic U.S. consumer debt mountain is finally starting to shrink.

At a recent economic meeting -- part of a series launched by Paulson before his economic world imploded -- the Chinese were urging the U.S. government to get its house in order, and in particular to increase savings, reduce credit card debt and protect the value of the very large Chinese investments in a range of U.S. assets.

Also in Beijing, the United States and China agreed to establish a $20 billion fund to help provide credit to importers, especially in emerging countries, so that global trade does not dry up and China's export-led economic growth doesn't splutter more than it has already.

The growing Global Economic Perfect Storm is now reaching into strange corners of the global economy. It has caused Honda to pull out of Formula 1 racing.

Australia is exploring a happy-go-lucky way to ride out the crisis. Leaders there have suggested that workers use some of their 121 million saved-up days off and go out and spend money. The program is called "No Leave, No Life" and suggests Australians fire up the local tourism and hospitality industry by taking time off to play tourist, take in the hospitality and spend money.

Leaders hope the workers will use the accumulated time off and the weakening Australian dollar to stay on the continent and help local economies.

It's a nice idea. But far more serious measures and sacrifices look likely around the world before the floodwaters of the global economic deluge finally start to recede.