Job cuts and unemployment add to US woes

America’s sinking economy was hit by two more financial torpedoes today when the unemployment rate shot to a 14-year high and Ford announced more redundancies.

The Labor Department said another 240,000 jobs were cut last month, as the jobless rate zoomed to 6.5% in October from 6.1% in September. Last month’s total matches the rate in March 1994.

Meanwhile, Ford provided further evidence of the weakening economy, saying it plans to cut about 2,260 more jobs and that it burned through 7.7 billion dollars in cash in the third quarter.

Unemployment has now surpassed the high seen after the last recession in 2001. The jobless rate peaked at 6.3% in June 2003.

October’s decline marked the 10th straight month of job cuts, and government revisions showed that job losses in August and September turned out to be much deeper. Employers cut 127,000 posts in August, compared with 73,000 previously reported. A massive 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.

So far this year 1.2 million jobs have disappeared.

Ford said it lost 129 million dollars in the third quarter and went through the 7.7 billion dollars in cash. The company said it will cut another 10% of its North American workforce costs as it tries to weather the worst economic downturn in decades.

The situation is likely to move from bad to worse next year. Many expect the jobless rate to climb to 8%, possibly higher. In the 1980-1982 recession, the unemployment rate rose as high as 10.8% before inching down.

Stressed shoppers are cutting back on their spending and trying to trim their debt.

Michael Niemira, chief economist at the International Council of Shopping Centres, summed up the situation as “awful.”

According to the ICSC-Goldman Sachs index, sales fell 1%, the weakest October performance since at least 1969 when the index began.

The country’s economic state has rapidly deteriorated in just a few months. The economy contracted at a 0.3% pace in the July-September quarter, signalling the onset of a likely recession. It was the worst showing since 2001 recession, and reflected a massive pullback by consumers.