Job Losses
Job losses exacerbated mortgage defaults and foreclosures. The news media recorded the trend
in unemployment as it evolved month by month. According to the US Department of Labor,
the US jobless rate rose to 7.3% in December 2008, the highest monthly figure for 16 years, as
a result of employers laying off 524 000 staff. This figure was surpassed many times in 2009,with the unemployment rate reaching 10.1%. The US Department of Labor’s Bureau of Labor
Statistics unemployment figures record the increase in unemployment between December 2006
and December 2009 as 7.2 million. The US national press described the drop in employment
as the biggest decline since the Great Depression. The total US unemployment figure for
2006 was 7 million and by 2009 it had reached 14.27 million (9.3%). Job losses had not only
occurred in the housing and service industries (banks and insurance companies) which were
directly affected by the subprime turmoil but had spread to retail, manufacturing, leisure and
professional services. Falling house prices, combined with news of rising unemployment in
other parts of the country, made homeowners both less wealthy and more cautious, contributing
to a gradual decline in spending. Less consumer spending eventually weakened the economy,
prompting companies to start laying off workers in a vicious cycle that caused households to
become even more frugal.