Economy Suffers First Job Loss In 4 Years

4,000 Jobs Lost Last Month; Economists Had Expected Job Gain Of 110,000 In August

(AP)  Employers sliced payrolls by 4,000 in August, the first drop in four years, a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy.

The latest snapshot of the employment climate, released by the Labor Department on Friday, also showed that the unemployment rate held steady at 4.6 percent, mainly because hundreds of thousands of people left the work force for any number of reasons.

Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.

"I think a lot of businesses are moving to the sidelines to wait and see how things shake out," said Ken Mayland, president of ClearView Economics.

On Wall Street, stocks tumbled. The Dow Jones industrials average was down more than 150 points in morning trading.

The report was much weaker than economists were expecting. They were forecasting payrolls to grow by 110,000.

The drop of 4,000 jobs in August was the first decline since August 2003. Payrolls fell by 42,000 at that time as the job market was still struggling to recover from the 2001 recession.

The surprisingly weak report provides the Federal Reserve with a reason to lower interest rates when it meets next on Sept. 18.

Federal Reserve Chairman Ben Bernanke, in a speech last week, said the Fed stands ready to do all that is needed to keep the credit crunch that has rocked Wall Street from damaging the economy.

Economists increasingly believe the Fed will lower a key interest rate, now at 5.25 percent, by at least one-quarter percentage point on Sept. 18, its next meeting. The Fed has not lowered this rate in four years.

"Clearly the economy is struggling, and this is the kind of evidence that really makes a strong case for a Fed easing move," Mayland said.

Those with jobs, however, did see modest wage gains.

Average hourly earnings rose to $17.50 in August, a 0.3 percent increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9 percent. Wage growth supports consumer spending, a major ingredient for a healthy economy. If the job markets continues to lose steam, however, wage growth will eventually slow, too, economists said.

The modest wage growth could ease inflation fears, giving the Fed more leeway to cut interest rates.

On the payrolls front, job gains in June and July turned out to be smaller. The economy added 68,000 new jobs in July compared with 92,000 reported a month ago. For June, 69,000 new jobs were created, less than the 126,000 previously reported.

The 4,000 jobs cut in August are from both private and government employers. The government actually cut 28,000 jobs, while all private employers added 24,000.

Credit problems began with "subprime" mortgages held by people with spotty credit histories or low incomes. The problems have spread to some more creditworthy borrowers and intensified in August, unnerving Wall Street. In reaction, the Fed has pumped tens of billions of dollars into the financial system and lowered an interest rate that it charges banks for loans.

Credit is the economy's life blood. If it becomes more difficult to obtain, people might tighten their belts and companies might spend and invest less, including cutting back on hiring. That would crimp overall economic activity.

Under a worst-case scenario, the economy could slip into a recession this year. Earlier this year, former Fed chief Alan Greenspan had put the odds at one in three.

Commerce Secretary Carlos Gutierrez, in an interview with The Associated Press on Friday, said that was a "low likelihood" and that the "most likely scenario is that we will get through this dip and we will continue to see growth."

The economy, which grew at a brisk 4 percent pace in the April-to-June period, is expected to slow to half that pace in the three months from July through September. Against this backdrop, the unemployment rate is expected to creep higher, reaching close to 5 percent by the end of the year.

The unemployment rate, which is derived from a different statistical survey than the payroll figures, held steady as 340,000 people left the work force. Fewer people in that survey reported finding employment in August compared with July.

President Bush's handling of the economy has gotten lukewarm ratings from the public. Only 41 percent approved of the president's economic stewardship in early August, according to an AP-Ipsos poll.

Mindful of political backlash heading into the 2008 elections, the administration and Democrats on Capitol Hill have been scrambling to help millions of homeowners in danger of losing their homes and looking for other ways to limit the fallout.

Sen. Hillary Clinton, D-N.Y., who is vying for her party's presidential nomination, called the new employment figure disappointing and said it was evidence that "the Bush administration's simplistic supply-side economic strategy is not working for working Americans."

[lorinkundert]

Nothing like incomplete data, Try calculating the 10''s of thousands of jobs lost due to the mortgage companies shutting down or scaling back, remove those figures and you would show a gain.

The housing market effects are unusual and should not be counted as part of the usual events in the job market.

[arnoldbowers]

Why should Clinton be lumped in with bush, cheney rove and rumsfeld. You got my attention with the remark as it did not make sense. the best of good byes, frank bowers in austin, tx

[oakishpines]

'' ... i miss being three and six years old, and watching all my naked lazy ignorant profane blemished savage friends being made to disappear forever ... they should do a show about that ... ''


'' ... most folk most time don''t really dance porno get sick tax world get well feed world songs rallied round the tens millions sick beds drifting the tens millions farm trail groups ... ''



'' ... lazy naked ignorant profave blemished savage folk never really go away, they just get stuffed in a closet somewhere and never see the light of day ... ''


'' ... some mean girls with bombs came and said to the big men: give us all your lazy naked ignorant profane blemished savages or else, and the men shrieked: take them, their yours! ... ''


'' ... giving away free market share to entreprenuers for small tips is the ultimate capitalist adventure ... ''

[tylenol6]

I just heard that Emperor Bush will be the most
traveled president in 2008......ALL AT THE EXPENSE
OF THE AMERICAN TAXPAYER!!!!!!!!!!!!!!!!!I guess he
plans on being on Air Force One than being in the
White House. Wonder what kind of damage he has planned for the american people that he will have
to be out of the U.S. Can you imagine how much more damage can be done in 1 year and 3 months?? Too bad
our IDIOTS in congress won''t do the will of the
american people and start impeachment of Bush and
Cheney. Totally disgusting.........

[olebd]

Hold on to your butts....and the i-phone you haven''t paid off yet!

[usayesterday]

AT LEASE 50,000 WORKERS ON THE PAY ROLL ARE NOT WORKING ANYMORE.

WERE IS THE STORY ON THAT..AND THAT IS NOT IN THE FIGURES
.............

They may have made enough money to put away for savings during the ''boom'' of the housing/mortgage market. The sad thing is, that they are going to be just as unemployed as anyone else, but they either chose not to file for unemployment because of possible "rainy day" savings or they decided to take a long vacation or early retirement.

OUR GOVERNMENT STATISTICS ARE OBSOLETE!

OUR GOVERNMENT IS OBSOLETE!

[forthepeopl1]

THIS IS ONLY THE BEGINNING PEOPLE, JUST IN THE PAST 3 MONTHS ONLY 110 COMPANY (WITH THE MORG INDUSTRY CLOSED THERE DOORS. AT LEASE 50,000 WORKERS ON THE PAY ROLL ARE NOT WORKING ANYMORE.

WERE IS THE STORY ON THAT..AND THAT IS NOT IN THE FIGURES

BUSH/CLINTON/ROVE/CHENEY ALL IN WASHINGTON SHOULD BE SHOT,FOR WHAT THEY HAVE DONE TO AMERICA

[racam_us]

This just goes to show how idiots can sit up in Washington and crunch numbers and make anything look good. It also shows how the rest of us are gullible enough to sit on our hind ends and believe this ***. Its not so much their fault for doing this as it is our fault for letting it go on when we know better.

[missingamerica]

Given this Administration''s known tendency to reject or rewrite findings from Federal departments that don''t meet with their political goals, you have to suspect that things are really bad out if they announced anything negative at all.

[tnt1954]

you know what would be so totally cool? we''ll
all play the stock market, get filthy rich,
and never work again. who will do the work?
androids. and they lived happily forever after
in the land of gaming, always winning never losing and peter pan and the easter bunny,
and santa claus and hebraic heroes and
islamic heroes and christian heroes all lived
in peace and harmony forever and ever. and
like rodney king famed motorist, said ''we all
got along'' just fine. and God is in his heaven
and 100% of the worlds population lived luxuriously forevermore. and there were no
ravens coming around at 3 am in the morning
saying ''nevermore''.