U.S. job losses raise recession worries

But businesses have become ever more adept at managing their temporary as well as permanent payrolls. So it's possible that old patterns no longer hold.

"It could be that this is a steady slide into a recession," he says. Yet "there's nothing that we've seen today that would tell us that that's actually the case."

Recession or no, the cooling job market symbolizes a changing economic climate for individuals and business alike – and for politics.

It is helping to cast the 2008 election in a different light, with the economy front and center. Ideas on how to help the housing market recover, and how to help the long-term unemployed, promise to get more attention than was anticipated. So will questions of tax policy, and how to ensure a good climate for businesses to create jobs.

Typically, a sour economy hurts the party that holds the White House heading into the election, suggesting a tough road for the Republican nominee.

In the near term, President Bush and Congress are scrambling to craft a temporary tax-relief package to stimulate the economy, and the Federal Reserve has been cutting interest rates.

The weaker job market also affects the way individual workers approach career changes. In St. Paul, Minn., receptionist Kris Melander thought carefully before making a job switch recently. She decided to take a job at an engineering firm, but only after checking about whether the firm's businesses could suffer if the housing slump deepened.

"That was one of my biggest concerns," she says. But "their areas [of business] are not affected by the housing market."

The job market also highlights growing pessimism among business leaders, resulting in less willingness to hire. Fewer businesses want to expand at a time when consumer spending appears to be softening. Many firms also see costs such as fuel rising, even as they have a hard time raising prices for their services.

"A cloud of pessimism has overtaken the business community," says economist Peter Morici at the University of Maryland. "They're no longer willing to hire."

In the 1990 and 2001 recessions, job creation slowed perceptibly, then turned negative once the slump was under way.

The tepid performance of the private-sector was matched by state governments, which shed 24,000 jobs. "Perhaps the budget squeezes are starting to affect hiring," Mr. Gault says. "That is a concern."

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