US Unemployment Rate Climbs up to 7.2%

US unemployment rate in December jumped from 6.8% to 7.2%, according to the Statistics of the US Bureau of Labor, Department of Labor. Payroll employment fell by 524,000 during the month and by 1.9 million during the last four months of 2008.

Since the start of the recession in December 2007, the number of unemployed persons has grown by 3.6 million, and the unemployment rate has risen by 2.3 percentage points.

U.K. Consumer Confidence Declined in December

U.K. consumer confidence fell to the lowest since at least 2004 in December as the recession deepened and unemployment rose, based on Nationwide Building Society. An index of sentiment fell four points from a month earlier to 47, the worst since the survey began four years ago. The reading, taken from a survey conducted between Nov. 17 and Dec. 14, compares with 84 points a year earlier.

The Bank of England will probably cut the benchmark interest rate further this week after reducing it in December to 2 percent, the lowest since 1951, economists say. Prime Minister Gordon Brown plans to unveil new measures to bolster the economy as it endures its first recession since 1991.

Consumers confidence fell sharply in 2008, driven mainly by their sentiment about the economic and labor market situation. As the U.K. enters recession it is likely to be some time before we see confidence returning.

Nationwide’s index of consumers’ future expectations declined four points to 60 points in December, and a measure of sentiment on the current situation declined two points to 28. A gauge of willingness to spend rose to 82 from 66, as stores stepped up discounting to attract shoppers.

Britain’s economic prospects are worsening as shrinking growth lead companies to cut staff. The economy contracted 0.6 percent in the third quarter, and consumer spending dropped the most since 1995. Unemployment rose at the fastest pace since 1991 in November.

The U.K. central bank will probably cut the benchmark interest rate by a half point to 1.5 percent on Jan. 8, according to the median forecast of 57 economists in a Bloomberg News survey. (Bloomberg)

Obama Said to Push for Tax Cuts in U.S. Stimulus Plan

President-elect Barack Obama is pushing for tax cuts amounting to hundreds of billions of dollars in a stimulus package he’s asking Congress to pass within the next several weeks, a transition official and a Democratic aide say. Obama is asking that tax cuts make up 40 percent of a stimulus package, the officials say. The measure may be worth as much as $775 billion, meaning tax cuts may constitute more than $300 billion of the legislation.

Making tax cuts such a large part of the stimulus may help win support from congressional Republicans. Senate Minority Leader Mitch McConnell, a Kentucky Republican, said today his party would support an immediate middle-class tax cut as part of any stimulus package.

Obama’s plan would attempt to boost consumer demand by spending $140 billion on tax breaks worth $500 for individuals and $1,000 for couples, according to a House Democratic aide. The change would come by altering tax-withholding rules, rather than though a rebate check as with the previous stimulus plan enacted last year, so that workers would see an immediate increase in their take-home pay.

The plan also includes business tax breaks, including ones allowing companies to write off more of their losses against previous years’ tax bills. Other provisions would allow companies to write off more of the cost of their equipment, the aide said. The plan also attempts to combat joblessness by offering companies tax breaks for hiring more workers, the aide said.

Many of the business tax incentives would be accelerated from future years so that any dollar written off now would not be able to be claimed in future years, the aide said. That would reduce the long-term impact of the tax cuts on the federal budget deficit.

The tax cuts would be part of stimulus Obama is seeking which will also boost spending for roads, bridges, power grids and other public works projects.