A new case for higher unemployment

Numbers are pointing the fact that the economy lost more jobs last year, more than any year in decades. According to Bloomberg, "Payrolls fell 500,000 in December, bringing last year's decline to 2.4 million, the most since 1945."

So, last year was a bad one. The stock market has opened as if this one will be better. Don't bet on it.

Many large industries may only be at the beginning of their layoff cycles. That is certainly true of retail. Some estimates are that another 70,000 stores will close in the U.S. this year. The auto industry will cut more jobs either to please Congress or due to outright bankruptcies. Small business has almost no access to capital, so that part of the economy is likely to eat through jobs as well.

Unemployment almost certainly went above 7% in December. Retail layoffs could push that toward 8% all by themselves. The idea that the entire economy could drop another three million jobs this year is entirely possible.

Whatever the stock market is signaling about a recovery is premature. Too many industries are in too much trouble to keep employment anywhere close to where it is today.

Douglas A. McIntyre is an editor at 247wallst.com.