Squeezed by tight credit and plunging spending power, the American economy is losing jobs at the fastest pace since 2001, and the losses could accelerate to levels not seen since the deep recession of the early 1980s. Employers shed 240,000 more jobs in October, the government reported Friday morning, the 10th consecutive monthly decline and a clear signal that the economic slowdown is troubling households and businesses. Since August, the economy has lost 651,000 jobs — more than three times as many as were lost from May to July. So far, 1.2 million jobs have been lost this year. “Clearly, these are very bad numbers,” said Nigel Gault, chief domestic economist at IHS Global Insight. “Businesses had been paring back for most of the year, but I suspect that it had been more caution on hiring rather than firing,” Gault said. “In September, they decided, ‘OK, look, this isn’t just a mini-recession, this is a full-blown recession. We better take some action.’ And they did.”The unemployment rate climbed to 6.5 per cent, the highest level since 1994 and up from 6.1 per cent the month before.The Labor Department also steeply revised down its employment numbers for the third quarter. Employers slashed 284,000 jobs in September, far higher than the 159,000 that was initially reported. In August, 127,000 jobs were lost, compared with the previous estimate of 73,000. “The US consumer, which for so many years was the global engine of growth, is now the world economy’s Achilles heel,” Joshua Shapiro, an economist at MFR, a research firm, wrote in a note.The latest monthly snapshot of the job market reinforced how the economy remains gripped by a potent combination of troubles — plunging housing prices, tight credit and shrinking paychecks — with all three operating at once in a downward spiral. Wages have effectively shrunk for most workers, as rising costs for food and fuel have more than absorbed meager increases in pay. That has further crimped American proclivities to spend. In October, weekly wages for rank-and-file workers — those not in supervisory or managerial positions — grew just 2.9 per cent from October 2007, well below the rate of inflation.
