US sheds most jobs since 2003, more cuts seen

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(Agencies)
Updated: 2008-10-06 09:41

American jobs are vanishing at the fastest pace in more than five years with pink slips likely to keep stacking higher in the months ahead, an urgent signal the United States may be careening toward a deep and painful recession just as American voters prepare to elect a new president on November 4.

Whether that's Democrat Barack Obama or Republican John McCain, one of them will be dealing with the weakest employment climate in years.

Increasingly skittish employers dropped the ax even harder in September, chopping payrolls by 159,000 — more than double the cuts made just one month before. It was the ninth straight month of job losses. The unemployment rate for blacks shot up to 11.4 percent.

A staggering 760,000 jobs have disappeared so far in 2008. The US Labor Department's report also showed that the nation's unemployment rate was 6.1 percent, up sharply from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.

"The labor market has a serious problem," said Joel Naroff, president of Naroff Economic Advisors. "Firms are hunkering down and running as lean as possible. ... We are likely to see more months of job losses before conditions turn around."

Even with Congress' unprecedented $700 billion financial bailout, the faltering US economy and the jobs market will possibly get worse.

The unemployment rate could hit 7 or 7.5 percent by late 2009, some economists have predicted. If that happens, it would mark the highest since after the 1990-91 recession.

Pressure is growing on US Federal Reserve Chairman Ben Bernanke to do an about-face and lower a key interest rate in a bid to revive the sagging economy. Many now think that will happen at the Fed's next meeting on October 28-29 or even earlier.

The hope riding on such a move would be to spur nervous consumers and businesses to spend more again. They've clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into a meltdown.

Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on American voters, analysts said.

White House spokesman Tony Fratto called the latest employment figures disappointing "but not unexpected given the shocks to the economy."

The 159,000 tally of total job losses — government and private payrolls — was the most since March 2003, when the labor market was still struggling to get back on its feet after being knocked down by the 2001 recession. Given a small net gain in government employment, the picture was particularly dark for private employers. They cut 168,000 jobs last month, the 10th month of such losses.

The pink slips were widespread.

Manufacturers (esp auto makers), home builders, retailers, securities and investment firms, hotels and motels, accountants and bookkeepers, architects and engineers, and legal services all cut back. So did temporary help firms — usually a barometer of future hiring.

Cost-cutting employers are getting rid of workers as companies chafe under all the economy's problems. Companies announcing layoffs in September included Hewlett-Packard Co., Schering-Plough Corp., Alaska Airlines and Alcoa Inc.

Spooked consumers and businesses have pulled back so much that some analysts fear the economy could stall out — or even worse — shrink in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession.