US reports massive job losses

George Bush acknowledges "difficult time" for the economy as recession fears grow.

    The subprime mortgage crisis has led to thousands of homes being repossessed [EPA]
    February's job losses were the biggest since March 2003 and a major disappointment for analysts, who had been expecting a gain of 25,000 jobs.
    Avery Shenfeld, a senior economist at CIBC World Markets, said: "It's nearly unheard of to see these numbers outside of recession."
    The US labour department report also showed a second straight month of losses in non-agricultural jobs.
    Fed action
    Ed Lazear, the White House's senior economic adviser, did not rule out negative economic growth for the current quarter.
    "This quarter will probably be our weakest quarter. Whether you call that a recession or not is something that we won't know for many months," he said. 
    The US central bank has also announced two initiatives to inject cash into the strapped financial market.
    This month it raised the amounts available in its Term Auction Facility, in which banks bid for loans up to a combined $100bn.
    It also launched a series of measures expected to pump up to $100 billion's worth of liquidity into the banking system.
    Congressional attack

    Citibank was among those that recently
    record losses [EPA]

    As the fallout from the subprime mortgage crisis continued, US lawmakers criticised banking executives for their high salaries at a time when banks were posting record losses.
    A session at the House Oversight and Government Reform Committee marked Congress's latest attack on the sky-rocketing compensation of chief executive officers.
    "There's merit to pay for performance. But it seems like CEO's hit the lottery even when their companies collapse," said Henry Waxman, a California Democrat and chairman of the committee.
    The three executives that appeared before Waxman's panel and said that they earned their pay, while admitting that mistakes were made in the handling of subprime mortgage investments.
    Angelo Mozilo, the CEO of Countrywide Financial, said: "The past six months have been horrific. This is the worst housing market I have ever seen."
    US banks have reported losses of tens of billions of dollars after offering loans that borrowers were later unable to repay.
    The crisis has also affected international lenders, who bought into or offered subprime loans in the US and then contributed to bouts of chaos on international financial markets.

    SOURCE: Agencies


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