Jobs weak, unemployment soars

Employers add fewer to payrolls than forecast, and the jobless rate hits 5%, a two-year high.

The nation's labor market worsened in December to the weakest level since the shock that followed Hurricane Katrina, as the problems in housing and mortgages, coupled with a disappointing pre-holiday shopping season, took a bite out of job opportunities.

Employers added far fewer jobs in the month than had been forecast, while the unemployment rate shot up to 5 percent, which was a two-year high, according to a government report Friday.
Stocks sold off sharply on rising fears of a possible recession ahead and there was a widespread belief in the markets that the Federal Reserve would have to respond to this report with a sharp drop in interest rates when it meets at the end of the month.

"December's bleak jobs report represents the siren call that this business cycle is just about over," said Bernard Baumohl, the managing director of the Economic Outlook Group, an economic research firm in Princeton, NJ. "We're about to tilt over to the other side of the economic curve and begin the downswing."

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