MSNBC reports today that the U.S. unemployment rate bolted to 7.2% in December 2008, the highest level in 16 years. In that one month alone, employers slashed more than 500,000 jobs, while experts believe that more layoffs will follow in January and possibly February.

The U.S. economy lost a net total of 2.6 million jobs in 2008. To compare: that is the most lost jobs in one year time since 1945.

The good news is that jobs have tripled in the last 5 decades. 2.6 million jobs may still be massive, but it is relatively nothing compared to the 2.8 million lost jobs in 1945. 2.8 million jobs back then equals 7.4 million jobs today.

The bad news is that 2.6 million lost jobs may be OK compared to 1945, but that it is still a tremendous high amount, the impact of which will be felt by virtually every single American.

An unemployment rate of 7.2% is also very high, at least for American standards. A year ago, only 4.6% of the American people were unemployed. A 2.6% increase is significant.

What is clear from all of this is that the situation will be worse in 2009 than it was in 2008. The unemployment will increase, more people will lose their job, and those with a job may have to accept a lower salary.

This opens the door to plans to stimulate the economy as President-Elect Barack Obama wants to do. Since most of his plans mean more government spending, fiscal conservatives tend to oppose all ’stimulation’ plans. Not all stimulation is the same, however; one can stimulate the economy by spending hundreds of billions more or one can stimulate it by encouraging private companies and individuals to spend by giving them tax breaks, cuts, etc.

Although a European fiscal conservative, who tend to believe that cutting taxes nor raising spending is the answer to an economic crisis (rather; fiscal responsibility is – spend a little bit less, same amount of taxes, support where necessary, but let the economy recover by itself), cutting taxes or at least providing some tax breaks to small and new businesses makes a lot of sense to me. This is not your average economic crisis; it could be much bigger and more influential than that. Encouraging and ‘helping’ small businesses (and the average citizen) by giving them tax breaks, cuts, and so on, would not pump up the economy artificially, but simply automatically and naturally encourage more spending and thereby limiting the downfall of the economy. There is nothing wrong with that, as long as tax cuts are accompanied by reduced government spending.