All 50 U.S. states saw increases in unemployment in December

Joblessness in two states, Michigan and Rhode Island, hit double-digit rates, of 10.6% and 10%, respectively. Eight states, and the District of Columbia, registered unemployment rates higher than the national average of 7.2%; the national average is also at a 16-year high. Wyoming and North Dakota posted the lowest unemployment rates in the nation, at 3.4% and 3.5%.

The U.S. lost more than 2.6 million jobs in 2008, and economist Peter Dawson told BloggingStocks Wednesday the best case scenario would have jobs losses tapering in the second half of 2009.

"We're going to need a combination of large fiscal stimulus, stable credit market conditions, and renewed business investment to get the job losses headed in a downward direction," Dawson said. "The proposed $825 billion stimulus package is a good start, but it will not end the recession and the job losses by itself.

Dawson said along with adequate access to credit for commerce, "a psychological shift is needed by businesses to commit to new projects, to invest." Absent that, the U.S. economy is likely to lose another 2.4-2.8 million jobs in 2009, which would push the national unemployment rate above 9%.

If the latter scenario occurs, corporate revenue and earnings would continue to decline, on a quarterly, year-over-year basis, through Q4 2009 and perhaps in 2010, he said.

Market / Economic Analysis: The view from here argues that rising unemployment will not be good for the stock market, given its implications for corporate revenue and earnings. While there have been instances when the Dow rose despite months of job losses, a pullback in consumption by working citizens, combined with another 6-9 months of large job losses, would be decidedly bearish for the Dow and S&P 500.