By Lucia Mutikani
WASHINGTON (Reuters) – U.S. business productivity plunged at the end of last year despite massive job cuts, which show little sign of abating as the 14-month recession deepens, data showed on Thursday.
With job losses mounting, households came under increased pressure and one in eight homeowners fell behind on mortgage payments or slipped into foreclosure as the year drew to a close.
While the Labor Department said new claims for jobless benefits fell last week, they remained at levels consistent with a severe recession.
“The economy and the job markets are still in a free fall. Things will get better eventually in the second half of the year, but in the first half they will get much worse,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington Massachusetts.
The weak data, coupled with a warning of a potential bankruptcy at General Motors (GM.N), hammered U.S. stocks. The Nasdaq .IXIC ended down 54.15 points at 1,299.59, a six-year low. Government bond prices and the U.S. dollar rallied as investors dumped risky assets in search of a safe-haven.