These will be decidedly unhappy holidays for hundreds of thousands of workers who won't have jobs thanks to the steep economic downturn and the financial crisis.

At a time when the economy usually creates about 300,000 jobs during the November-December holiday span, economists predict it likely will lose about twice that, creating a void of about 1 million fewer jobs this year.

The pain from such a yuletide contraction will be felt far and wide. Friday's jobs number will provide the first indication of how bad things are so far, but not about how bad they'll get.

"There's a newfound urgency on the part of companies to get their financial houses in order so that they can brace themselves for what lies ahead in the weak global economy and then be in a position to respond to it swiftly with a leaner, meaner work force," says David Ressler, chief economist at Nomura Securities in New York.

"That's going to be one of the many factors holding back consumer spending during the holidays," he adds. "It's definitely going to be a tough Christmas for a lot of people."

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Analysts expect the retail and manufacturing industries to get hit hardest—in general, anything consumer-related—with health care and educational services to be largely spared.

The worst of the layoffs will occur in the coming three or four months, with the consensus for a let-up happening around the end of the second quarter in 2009.

But until then—and especially during the holiday season, which retailers rely on for their lifeblood—the onslaught of job cuts will be brutal, with even the temporary workers that stores hire affected.

"For individual households it's devastating and it's painful and it's just about every horrible adjective you can attach to it, " Ressler says. "But it does come to an end. When it does, the economy will start to improve, people will start getting their lives back in order."

Cleaning Up Balance Sheets

Job losses always have had a ripple effect through the economy. But during a time when retail sales are so weak and housing continues to struggle, the unemployment numbers will be felt especially hard.

The monthly jobless claims report—November's is due Friday and will be closely watched—is only a lagging indicator of what happened in the previous month.

What's scarier, then, is what lies ahead, and December's number will provide even more gloom. AT&T unveiled plans Thursday to cut 12,000 workers starting immediately, while DuPont will lay off 2,500 and Credit Suisse will slash 5,300 from its payrolls.

"What happens is it feeds on itself," says Quincy Krosby, chief investment strategist at The Hartford. "Businesses will watch what their competitors are doing, particularly in an environment where you're not seeing much demand. You don't want your competitors to have an advantage, and part of that is your competitor is cutting costs. Chances are it will lead to more cuts on your balance sheet."

"You look at the retailers dealing with razor-thin margins, probably at the stage where they just want to clear inventory—hardly a scenario for hiring," she adds.

With investors clamoring for tighter bottom lines, companies will be under intense pressure to clean house before closing the books on 2008, with layoffs carrying over by some estimates through much of 2010

"It's a real shame but that's the way things work these days. It takes a long time to get back to profitability, particularly when we have pretty modest economic recoveries," says Kurt Karl, chief US economist at Swiss Re. "You hope it's not going to happen before the holidays, but businesses have to do what they have to do."

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