As many as 1,59,000 jobs were cut in the US in September, the worst ever retrenchment in a month for five years, the government has reported, heightening fears that the economic downturn was worsening and could persist well into next year.
The job loss has continued for nine consecutive months totalling 7,60,000 in the period, according to the Labor Department's report released Friday. In the last couple of weeks many people also had to leave work as several Wall Street institutions collapsed.
"We've lost jobs in nearly every area of the economy, and this is going to get worse before it gets better because the credit markets have deteriorated basically on a daily basis for the last few weeks," Michael T. Darda, chief economist at MKM Partners, a research and trading firm in Connecticut, was quoted as saying by the New York Times.
Though the financial bailout plan cleared by Congress and signed into law by President George W. Bush Friday may restore order in the financial system, it will take time for its effect to be felt.
In a chain reaction, housing prices continue to fall, eroding household wealth just as millions are trapped in unmanageable debt. The shrinking job market has taken many paychecks out of the economy, forcing people to rethink thrift, resulting in reduced sales from car showrooms to hair salons.
Till only a few weeks ago, many economists held hopes of the economy recovering late this year or early next year. But now with the job market contracting faster, and fear dogging the financial system, 2008 is seen as a lost cause.
The more pessimistic analysts don't mind using the word 'recession'.
"This is an economy in recession, and every dimension of the (labour) report confirms that," said Ethan S. Harris, an economist at Barclays Capital. "This has been preceded by a slow-motion recession. Now we're going into the full-speed recession that will last somewhere between three and five quarters."
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