US jobless figures:US JOBS plunged in September, signalling the economy may be heading for its worst recession in at least a quarter century as the 13-month-old credit crisis on Wall Street finally hits home on Main Street.
Employers cut the most jobs in five years last month as cash-squeezed companies pulled back in an effort to bolster pinched profits.
In its last employment report before Americans choose their next president, the Labor Department said that the unemployment rate was 6.1 per cent, a climb of 1.4 percentage points from a year before.
"If credit markets remain dysfunctional, the current recession could turn out to be as severe as any in the postwar period," said former Federal Reserve governor Lyle Gramley, now senior economic adviser at the Stanford Group in Washington.
The unemployment rate has only risen twice in the year leading up to elections since the second World War, and in each case the incumbent party lost.
Job losses accelerated as the credit crisis deepened last month, forcing the failure or government takeovers of Lehman Brothers, Fannie Mae, Freddie Mac and American International Group (AIG).
Yesterday's report showed that hours worked - considered a good proxy for the state of the overall economy - matched the lowest level since records began in 1964.
That indicates the likely current recession may be at least as severe as the 1981-82 slump, during which gross domestic product shrank by 2.7 per cent.
Jobs fell by 159,000 in September. Aside from a 9,000 gain in government jobs, all major categories showed declines except education and healthcare.
"The really bad news here is that job losses are now widespread," said Nariman Behravesh, chief economist at Global Insight, a Massachusetts forecasting firm.
- (Bloomberg)
