The number of people continuing to seek unemployment benefits has risen sharply, according to government data released Thursday, indicating that laid-off workers are having a harder time finding new jobs as the recession enters its second year.

The Labor Department also reported that initial applications for unemployment insurance dropped by 24,000 to a seasonally adjusted 467,000 for the week ending Jan. 3. Wall Street economists expected initial claims to increase, but analysts said the new figure reflects the difficulty the government has in making seasonal adjustments over the holiday period.

The four-week average of initial claims, which smooths out fluctuations but also includes the shortened holiday weeks, fell by 27,000 to 525,750.

The US government loans to the auto industry, conditioned on a massive attack on the wages and jobs of auto workers, are being used as a spearhead for broader attacks on the working class throughout the country. This attack has already begun, with numerous companies recently announcing pay cuts and layoffs for the coming year in response to the deepening economic crisis.

Many of the new pay cuts affect salaried positions. While cuts to the pay packages of top executives are largely designed to lend the impression of “shared sacrifice,” the salaries and pensions of wider layers of managerial and professional personnel—a large component of the US “middle class”—are being significantly reduced.

President-elect Barack Obama warned that without immediate steps by the government to revive the economy, family incomes will drop, the unemployment rate could reach “double digits” and the U.S. risks losing a “generation of potential and promise.”

Obama’s speech, which aides billed as a “major” economic address, is part of a broader pitch to Congress and the American public as he works on selling his $775 billion, two-year economic stimulus plan to pull the U.S. out of a recession. While the excerpts released by his transition office didn’t provide specifics of the plan, advisers said the full speech would expand on previously reported elements.

He also will again call for using the government’s “full arsenal of tools” to unlock credit markets and “a sweeping effort” to stem home foreclosures. Obama also is promising to overhaul financial-markets regulations and crack down on “reckless greed and risk-taking” on Wall Street to restore confidence in markets.

Sometimes I feel that this economic crisis is accomplishing what the conservatives have wanted for years–the death of the middle class.