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US angst-ridden economy leads to more job losses

(Xinhua)
Updated: 2008-10-04 10:49

LOS ANGELES -- US unemployment kept rising in its fastest pace in more than five years in September due to a worsening economic downturn, the Labor Department said Friday.

A total of 159,000 non-farm payroll jobs had been slashed last month, more than double the 73,000 jobs lost in August, the department said in its monthly report.

First-time claims for unemployment benefits had increased last week to the highest level since the period after the September 11, 2001 terror attacks, said the report.

It added that the economic outlook by economists and surveys is grim despite the Congress' emergency action to provide 700 billion dollars intended to stabilize the financial system.

The underemployment rate had jumped to 11 percent -- the highest level in 14 years - and the number of "discouraged workers" not seeking employment work also climbed, the report said.

"Factoring in discouraged workers raises the unemployment rate to about 7.9 percent," said the University of Maryland's Peter Morici, former chief economist of the US International Trade Commission.

"As the economy slows further, this figure will likely exceed 10 percent," Morici added.

"We're in a jobs recession that's going to escalate because there is no obvious factor that is going to increase spending right now," said Stephen Levy of the Center for the Continuing Study of the California Economy, based in Palo Alto near San Francisco.

"There's not going to be a Great Depression but there won't be a quick turnaround either. A substantial turnaround is probably two years away."

Meanwhile, a national survey released Friday by the Society for Human Resource Management shows that "hiring expectations for October continue to indicate the toughest labor conditions in recent years." A survey on proverbial "Main Street" small businesses by an online payroll management firm showed that confidence plummeted from 79.8 percent to 44 percent in a single month.

"That's the first time we've ever seen the optimism of small business owners drop below the 50 percent," said Michael Alter, president of Illinois-based SurePayroll. "It's particularly remarkable given that small business owners tend to be more optimistic than the average citizen. Pessimists generally don't put all their savings on the line to start a business venture."

"What's happened on Wall Street is a bit like Hurricane Ike gathering strength off the coast," Alter said. "I've talked to enough business owners to know that Main Street hasn't been hit yet, but small business owners see it coming."

The United States has been losting jobs every month since December, even as numbers for productivity and Gross Domestic Product have continued to grow, said Jared Bernstein, senior economist of the liberal Economic Policy Institute.

"Quite simply, ordinary Americans are not benefiting from the strong economic growth accomplished in recent years with housing prices and retirement accounts dropping in value," he said.