Job losses are greatest in 5 years

Unemployment rose to 6.1 percent, up from 4.7 percent a year ago, as 159,000 jobs were eliminated

WASHINGTON -- Jobs are vanishing at the fastest pace in more than five years, with pink slips likely to keep stacking higher in the months ahead.

It's an urgent signal the country may be careening toward a deep and painful recession just as Americans prepare to elect a new president. Whether that's Democrat Barack Obama or Republican John McCain, one of them will be dealing with the weakest employment climate in years.

Increasingly skittish employers dropped the ax even harder in September, chopping payrolls by 159,000 -- more than double the cuts made just one month before. It was the ninth-straight month of job losses. A staggering 760,000 jobs have disappeared so far this year.

The Labor Department's report, released Friday, also showed that the nation's unemployment rate was 6.1 percent, up sharply from 4.7 percent a year ago. Over the last year, the number of unemployed people has risen by 2.2 million to 9.5 million.

"Washington, the labor market has a problem," said Joel Naroff, president of Naroff Economic Advisors. "Firms are hunkering down and running as lean as possible. ... We are likely to see more months of job losses before conditions turn around."

The unemployment rate for blacks shot up to 11.4 percent, the highest since late 2003.

Even with Congress' unprecedented $700 billion financial bailout, the faltering economy and the jobs markets probably will get worse. Many think the economy will jolt into reverse later this year -- if it hasn't already-- and will stay sickly well into next year.

The unemployment rate could hit 7 or 7.5 percent by late 2009. If that happens, it would be the highest since after the 1990-91 recession. Some economists say the jobless rate could rise even more before improving.

Pressure is growing on Federal Reserve Chairman Ben Bernanke to do an about-face and lower a key interest rate in a bid to revive the economy. Many now think that will happen at the Fed's next meeting Oct. 28-29 or even earlier.

The hope riding on such a move would be to spur nervous consumers and businesses to spend more freely again. They've clamped down as housing, credit and financial problems intensified last month, throwing Wall Street into chaos.

Friday's employment snapshot is the last before American voters go to the polls in November.

Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on the American populace.

Economy top concern

The economy is their No. 1 concern. An Associated Press-GfK poll earlier this week showed that likely voters now back Obama 48 percent to McCain's 41 percent. They believe Obama is better suited to lead the country through the financial turbulence.

"I will rebuild the middle class and create millions of new jobs by investing in infrastructure and renewable energy," vowed Obama.

McCain pledged to "open markets around the globe for our products, cut taxes and expand domestic production of energy. ... I will create jobs and get the economy on the right track."

White House spokesman Tony Fratto called the latest employment figures disappointing "but not unexpected, given the shocks to the economy."

The 159,000 tally of total job losses -- government and private payrolls -- was the most since March 2003, when the labor market was still struggling to get back on its feet after being knocked down by the 2001 recession. The picture was even darker for private employers. They cut 168,000 jobs last month, the 10th month of such losses.

The pink slips were widespread.

Manufacturers (especially automakers), home builders, retailers, securities and investment firms, hotels and motels, accountants and bookkeepers, architects and engineers, and legal services all cut back. So did temporary help groups -- usually a barometer of future hiring. That overwhelmed employment gains by the government, in education, health and elsewhere.

National, local cuts

Cost-cutting employers are getting rid of workers as companies chafe under all the economy's problems. Companies announcing layoffs in September included Hanesbrands, Hewlett-Packard, Schering-Plough, Alaska Airlines and Alcoa.

In the Triangle, this week alone has brought job-cut announcements from drugmaker GlaxoSmithKline, cell-phone maker Sony Ericcson and textile maker Freudenberg Nonwovens. Across North Carolina this week, Spectrum Yarns, Georgia-Pacific and CR Home announced major layoffs.

Spooked consumers and businesses have pulled back so much that some analysts fear the economy could stall out -- or even worse -- shrink in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession.

"The economy was on the way down even before the latest tightening in the credit crunch," said Nigel Gault, economist at Global Insight.