'Credit crunch hits job market
Economists say Fed will likely cut rate
BARRIE MCKENNA
WASHINGTON -- A sudden and unexpected drop in U.S. jobs has stoked fears that the fallout from the housing slump has only just begun, sending global stocks tumbling again.
Paced by losses in construction and manufacturing, the world's largest economy shed jobs for the first time in four years last month, according to the U.S. Labour Department.
The August figures, combined with new lower estimates of jobs created in prior months, are ominous signs the turmoil may be shifting from Wall Street to Main Street.
The question now is whether the United States can avoid a full-blown recession
"A drop of this magnitude has never been observed outside recessions," National Bank Financial economist Stéfane Marion remarked. "That is unnerving."
The jobs report marks "the first solid evidence that the economic turmoil in financial markets has found its way into the job market," said economist Jared Bernstein of the Washington-based Economic Policy Institute.
Mr. Bernstein said we're now seeing a "contagion" effect from the bursting housing bubble, the credit crunch, and recent financial market strife.
"It was only a matter of time before the housing slump started showing up in the employment numbers," said John Challenger of recruiting firm Challenger Gray & Christmas Inc. "The unexpected loss of 4,000 jobs in August ... may only be the beginning as the home market collapse ripples through the economy."
Analysts said the report virtually guarantees that the U.S. Federal Reserve Board, which has so far resisted calls to cut its benchmark lending rate, will offer some interest rate relief when it meets Sept. 18.'
Economists say Fed will likely cut rate
BARRIE MCKENNA
WASHINGTON -- A sudden and unexpected drop in U.S. jobs has stoked fears that the fallout from the housing slump has only just begun, sending global stocks tumbling again.
Paced by losses in construction and manufacturing, the world's largest economy shed jobs for the first time in four years last month, according to the U.S. Labour Department.
The August figures, combined with new lower estimates of jobs created in prior months, are ominous signs the turmoil may be shifting from Wall Street to Main Street.
The question now is whether the United States can avoid a full-blown recession
"A drop of this magnitude has never been observed outside recessions," National Bank Financial economist Stéfane Marion remarked. "That is unnerving."
The jobs report marks "the first solid evidence that the economic turmoil in financial markets has found its way into the job market," said economist Jared Bernstein of the Washington-based Economic Policy Institute.
Mr. Bernstein said we're now seeing a "contagion" effect from the bursting housing bubble, the credit crunch, and recent financial market strife.
"It was only a matter of time before the housing slump started showing up in the employment numbers," said John Challenger of recruiting firm Challenger Gray & Christmas Inc. "The unexpected loss of 4,000 jobs in August ... may only be the beginning as the home market collapse ripples through the economy."
Analysts said the report virtually guarantees that the U.S. Federal Reserve Board, which has so far resisted calls to cut its benchmark lending rate, will offer some interest rate relief when it meets Sept. 18.'
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