WASHINGTON - The nation's unemployment rate bolted to 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs, capping one of the worst years in modern history for American workers.

The Labor Department's report, released Friday, underscored the grim toll the deepening recession is having on workers and companies. And it highlights the difficulty President-elect Barack Obama faces in resuscitating the flat-lined economy. This year has gotten off to a rough start with a flurry of big corporate layoffs, pointing to another year of hefty job reductions.

"There is no end in sight in terms of layoffs," said economist Ken Mayland, president of ClearView Economics. "January could be worse because some companies put layoffs on hold because of holiday sensitivities."

Not only are employers slashing jobs; they also are cutting workers' hours and forcing some into part-time work. The average work week in December fell to 33.3 hours, the lowest level on records dating to 1964 - and a sign of more job reductions in the months ahead, economists said.

Obama called the unemployment report "a stark reminder of how urgently action is needed" to revive the nation's staggering economy. And Hilda Solis, his pick for labor secretary, called the job losses "a crisis situation" and said one of her initiatives would promote "green jobs" that could reduce the nation's dependence on foreign oil.

For all of 2008, the economy lost a net total of 2.6 million jobs. It was the first time payrolls had fallen for a full year since 2002 and was the most since 1945, when nearly 2.8 million jobs were lost. Though the U.S. labor force has more than tripled since then, losses of this magnitude are still being painfully felt.

With employers throttling back hiring, the nation's jobless rate averaged 5.8 percent last year. That was up sharply from 4.6 percent in 2007 and was the highest since 2003.

All told, 11.1 million people were unemployed in December. In addition, 8 million people were working part time - a category that includes those who would like to work full time but whose hours were cut back or those who were unable to find full-time work. That was up sharply from 7.3 million in November.

While economists were forecasting even more payroll reductions in December - around 550,000 - job losses in both October and November turned out to be deeper than previously estimated. Revised figures showed employers slashed 584,000 positions in November and 423,000 in October.

The unemployment rate, meanwhile, rose from 6.8 percent in November, to 7.2 percent last month, the highest since January 1993.