A man reacts to being terminated from his job
A man reacts to being terminated from his job - 
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Kai Ryssdal: There is a cart before the economic horse element that needs to be addressed here. Before we start digging our way out of debt we'll have to dig our way out of this recession. There was news this morning that makes it look like we haven't hit the bottom there yet. The payroll processing firm ADP came out with its monthly employment report. ADP says the private sector lost 693,000 jobs last month. Bad enough. But it gets worse. The number was 30 percent higher than most had been expecting. From New York, Marketplace's Jeremy Hobson reports.

Jeremy Hobson: The employment number lags other indicators. In fact, some economists think December's terrible job figures stem from the collapse of Lehman Brothers back in September. But, says economist Dana Saporta at the investment bank Dresdner Kleinwort, higher unemployment means Americans will spend even less.

Dana Saporta: So we are very likely to see the savings rate increase going forward. You would think savings is a good thing but in times like this, it could actually serve to push economic growth down even further.

Joel Prakken, chairman of Macroeconomic Advisers, compiled the data for today's ADP report. He says what's most worrying is the damage being done to small and medium sized businesses, which accounted for the vast majority of December's job cuts.

Joel Prakken: Small firms had, up to a few months ago, been clinging tenaciously to their employees. But it looks now like even relatively small firms have decided that they need to shed jobs too.

Prakken says the Obama stimulus package could change things dramatically. But the current forecast for the coming months does not look good.

Prakken: It would not surprise me in the least to see several more months of job losses, of several hundred thousand per month, and a total decline in employment over 2009 of between one and a half and two million more.

On Friday, we'll get December employment figures from the government. In recent months, the two reports have differed somewhat. But a new change in ADP's methodology has some economists worried that Friday's numbers may look an awful lot like today's.

In New York, I'm Jeremy Hobson for Marketplace.

Follow Jeremy Hobson at @jeremyhobson