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598,000 jobs cut in January, the biggest loss in 35 years

WASHINGTON — Worse-than-expected January job losses announced by the government Friday put pressure on the Obama administration and Congress to pass economic stimulus legislation quickly and move on to tackle the banking and housing crises, which are fueling the rapidly worsening contraction of the nation's economy.

Employers shed 598,000 jobs in January, the Labor Department said, the worst monthly showing since 1974. The unemployment rate in January rose four-tenths of a percentage point from December to 7.6 percent as businesses sent workers packing in virtually all sectors of the economy. Roughly 11.6 million Americans are now officially unemployed.

Government and health care were the only sectors that added substantial number of jobs, 22,000 and 19,000 positions, respectively.

Since the recession began in December 2007, the U.S. economy has lost about 3.6 million jobs. Almost half of them were shed over the past three months, and about three-quarters in the past five months.

"This is the largest 13-month job loss since the payroll employment series began in 1939," Christina Romer, the head of the White House Council of Economic Advisers, said in a statement. "These numbers, and the very real suffering of American workers they represent, reinforce the need for bold fiscal action. If we fail to act, we are likely to lose millions more jobs and the unemployment rate could reach double digits."

Independent analysts emphasized that almost no economic sector was spared, and that underscores a sense of hopelessness for the newly unemployed.

"The breadth of the job declines across industries, occupations and regions is unprecedented. If one loses their job, it's not clear what to do," said Mark Zandi, the chief economist for forecaster Moody's Economy.com. "This is one reason that confidence has been shattered."

Friday's job numbers argue for bolder action to fix frozen credit markets and reverse a deep decline in home prices and rising foreclosures.

"The jobs numbers underscore we need both a fiscal stimulus and a financial market repair plan," said Vincent Reinhart, a former top economist of the Federal Reserve's rate-setting Open Market Committee.

Treasury Secretary TimothyGeithner is set to deliver a speech Monday outlining his plan to restore financial stability and jump-start lending. He's expected to announce measures to address the banking sector and mortgage finance.

CNBC reported Friday evening that Geithner will call for a "bad bank" that buys up to $500 billion in bad assets from commercial banks. His plan also would inject an unspecified amount of capital into banks, beyond the $700 billion authorized last October in the Wall Street bailout plan, the channel said.

In addition, the Federal Reserve announced Friday evening that it will provide up to $200 billion in loans to qualified investors who hold pools of car, student, motorcycle and small business loans and credit card debt. The Treasury Department will provide $20 billion in credit protection.

All three efforts aim to get more capital into other financial institutions. Given how poorly the original $350 billion has been accounted for, asking Congress for more bailout money is a political non-starter.

In Friday's report, declining sectors were led by manufacturing, which lost 207,000 jobs, the most in one month since October 1982. Construction fell by 111,000, retail employment by 45,000, transportation and warehousing by 44,000 and financial services by 42,000.

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