- The Washington Times - Saturday, November 8, 2008

Unemployment soared last month to a 14-year high, the Labor Department reported Friday, prompting the head of the panel that officially dates U.S. economic cycles to say there is no doubt that a recession is under way.

Businesses slashed nearly a quarter-million jobs, pushing the unemployment rate to 6.5 percent, the department said. The losses were deep and widespread across nearly every industry from retailing and office work to construction and manufacturing.

Only the health care, education, mining and government sectors avoided the job slaughter and posted modest employment gains.

“The evidence [of a recession] is more than compelling,” Robert Hall, the Stanford University economist who heads the National Bureau of Economic Research’s business-cycle dating committee, told Bloomberg News. “It’s conclusive, in my personal opinion.”

The full committee of eight economists has not officially declared that America is in a recession, however.

The 240,000 jobs eliminated last month came on top of a revised 284,000 job cut in September — far more than originally reported. Together, the figures show how the economy virtually fell off a cliff at the onset of a severe credit crisis that cut off financing for consumers and businesses alike while it caused the failure of a major Wall Street firm and banks in quick succession.

Manufacturers laid off a stunning 90,000 workers, while construction employment fell by another 49,000 and retailers trimmed staff by 38,000.

“We’re in the teeth of recession,” said John Silvia, chief economist at Wachovia Securities. He said the job losses will weigh heavily on consumers, who already have pulled back dramatically from spending in the past two months. And they point to a big drop in the economy in the final quarter of the year.

Harm Bandholz, economist at Unicredit Markets, noted that the job losses in the past two months amount to more than a half-million and bring the job losses for the year so far to more than 1 million - clearly pointing to a profound recession.

“This is a nasty development,” he said. “While the labor market is already in its worst condition since the 2001 recession, we expect it to weaken further,” with the unemployment rate rising as high as 8 percent by the end of next year.

In a separate report, the National Association of Realtors said that its index of pending home sales declined 4.6 percent in October. The decline indicates the credit crisis will continue to afflict the housing market.

The Commerce Department reported that inventories at U.S. wholesalers unexpectedly fell 0.1 percent in September, but they remain elevated, indicating that factories will receive fewer orders in coming months.

After losing about 10 percent of its value during the previous two days, the stock market rose nearly 3 percent in Friday trading.

• Click here: Evidence of recession ‘more than compelling’

The Dow Jones Industrial Average, which lost 486 points on Wednesday and 443 points on Thursday, gained 248 points, or 2.9 percent, on Friday, closing at 8,943.81. The Standard & Poor’s 500 Index, which lost more than 100 points over the previous two days, regained 25.87 points (2.9 percent), while the tech-heavy Nasdaq Composite Index gained 38.70 points (2.4 percent) to end Friday at 1,647.40.


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