Washington, DC, Oct. 8—Businesses cut 190,000 jobs last month, the largest cuts in more than a decade, according to the Labor Department in a report that demonstrated how anemic the economy was even before the terrorist attacks. The overall unemployment rate remained at 4.9%, but it’s expected to rise sharply when figures are released for the current month.

The new report did not reflect job losses related to the September 11 attacks. Since then, more than 100,000 layoffs have been announced in the aviation industry alone. The surveys were conducted the week of the attacks, but a person was counted as employed even if he only worked one hour during that week. Even if workers were laid off afterward, they would still be considered employed in the report. Many economists think the unemployment rate in October could surge to 5.3% or higher when layoffs from the attacks show up in government surveys.

“We’re going to see a rise in the unemployment rates. That's not in doubt,” Treasury secretary Paul O'Neill said. 

“You can call those numbers the bin Laden numbers,” Labor Secretary Elaine Chao said, referring to the man the administration has pinpointed for the attacks, Osama bin Laden.

For September, the cut in 199,000 jobs was the largest one month decline since payroll jobs fell by 259,000 in February 1991, when the country was in the depths of the last recession.

Manufacturing jobs again accounted for much of the loss. Factories let go 93,000 workers last month, the 14th straight month of manufacturing job losses. Over that period, 1.1 million workers lost their jobs. Factories making industrial machinery and electrical equipment were particularly hard hit, and accounted for nearly two fifths of the manufacturing jobs cut this year.

“The job picture looks very grim,” said Joel L. Naroff, president and chief economist of Naroff Economic Advisors.

Many economists, who now think the nation is entering a full blown recession because of the attacks, predict the jobless rate could climb to 6.5% before a recovery begins. Just last year, unemployment had fallen to a three-decade low of 3.9%.

“The fallout from the attacks made an already bad situation worse,” said Dean Baker, an economist for the Center for Economic and Policy Research.

Service jobs, where most Americans are employed, showed a rare decline for September, with cuts of 41,000 jobs. The biggest decline in that category was in business services, which includes temporary help agencies.

President Bush, whose father was in the White House during the last downturn, is working with Congress to fashion an economic stimulus package of as much as $75 billion. It would be aimed at Americans who lost their jobs after the attacks, and could include extended unemployment benefits and $3 billion in grants.

But Democrats complain that Bush's proposal tilts too much in favor of tax cuts for the wealthy at the expense of laid off workers.

The Federal Reserve cut interest rates on Tuesday for a ninth time, a half point cut which drove the key rate to its lowest point in nearly 40 years.

The biggest economic concern is Americans' confidence. Analysts fear they will shut their wallets over worries about layoffs and a war against terrorism.

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