The U.S. economy lost more than half a million jobs in December and the unemployment rate rose to a 16-year high last month, capping off a difficult and tense year for American businesses and workers.

According to a Labor Department report Friday, 524,000 jobs were lost in the final month of 2008, and the jobless rate surged to 7.2%, the biggest number since early 1993.

On average, economists were expecting a loss of 525,000 jobs last month, according to a Bloomberg survey. The unemployment rate was forecast to rise, but a bit more modestly, to 7%.

Meanwhile, an additional 154,000 jobs were shed in October and November than the government previously reported. For all of 2008, roughly 2.6 million workers across the country were put out of work, the bulk of them in the final one-third of the year. That made for the worst year since 1945.

Job losses have been accelerating recently, and just this week companies across a variety of industries, including Alcoa ( AA - Get Report), Walgreen ( WAG) and Meredith ( MDP - Get Report), have said they would reduce their headcount.

This article was written by a staff member of TheStreet.com.