August job loss shocks economists

There was good economic news in August, with strong retailing and manufacturing numbers. But there was also bad news: the Labor Department says 4,000 jobs were lost last month and that has caught economists by surprise. The report was a shock. August marked the first down month for American job growth figures in four years. In a month where economists were expecting the nation's employers to add about 120,000 to their payrolls. In addition to the decline for August, Wall Street was faced with a downward revision for June and July's jobs numbers that took another 81,000 previously reported jobs off the table. The reaction to the news put traders into a tailspin, pushing the Dow down by triple-digits at the opening bell. Why are they worried? Friday's bad jobs report has many economists seriously concerned about the possibility of a recession. Recent indicators of declining consumer confidence and the decrease in big-ticket purchases plus the continuing slump in the housing market are pointing to an economic slowdown that could be expanding. At this point government and private sector economists are hopeful we won't see a recession -- but acknowledge that the slow-down could be more significant than they previously thought. The Federal Reserve meets in 11 days -- many people believe the central bankers will cut interest rates to lending institutions to stimulate economic activity.

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