US unemployment seen topping 2 million in New Year

The level of unemployment in the US is expected to top two million in the New Year with the number of new jobless claims ruling at 554,000 in the week ended 13 December and fresh job cuts planned by industry across various sectors.

The weekly data, although was down 46,000 from the previous week's figure of 600,000, was well within economists' projection of 558,000 for the week.

Average initial jobless claims in the US rose 2,750 to 543,750, the highest level since December 1982. But the number of people continuing to receive unemployment insurance in the week ending 6 December fell 47,000 to 4.38 million.

The number of ongoing jobless claims increased by 92,000 to 4.23 million, the highest level since January 1983.

President-elect Barack Obama's advisers have now sought an economy booster plan, that could cost as much as $1 trillion over the next two years, to boost employment.

Obama's top economic advisers say they have not arrived at a figure, but they are sure that a far bigger sum has to be considered for saving enough to create 2.5 million jobs over two years.

A $600 billion package would be enough to meet jobs goal for the first quarter of 2011, but would leave an unemployment rate of 8 per cent two years from now, they point out.

To put unemployment on a lower trajectory of around 7.5 per cent or less over the next two years, the government would have to prepare a stimulus plan of about $850 billion.

A &1 trillion stimulus package, however, could face opposition from both Republican and Democrat members as it would raise the budget deficit gigantic proportions.