Employers cut 159,000 jobs in September

The 159,000 tally of total job losses — government and private payrolls — was the most since March 2003, when the labor market was still struggling to get back on its feet after being knocked down by the 2001 recession. The picture was even darker for private employers. They cut 168,000 jobs last month, the 10th month of such losses.

The pink slips were widespread.

Manufacturers (especially auto makers), home builders, retailers, securities and investment firms, hotels and motels, accountants and bookkeepers, architects and engineers, and legal services all cut back. So did temporary help firms — usually a barometer of future hiring. That overwhelmed employment gains by the government, in education, health and elsewhere.

Cost-cutting employers are getting rid of workers as companies chafe under all the economy's problems. Companies announcing layoffs in September included Hanesbrands Inc., Hewlett-Packard Co., Schering-Plough Corp., Alaska Airlines and Alcoa Inc.

Spooked consumers and businesses have pulled back so much that some analysts fear the economy could stall out — or even worse — shrink in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession.

"The economy was on the way down even before the latest tightening in the credit crunch," said Nigel Gault, economist at Global Insight.

Wage growth for workers is slowing, meaning they'll be more hard-pressed to spend and help the ailing economy.

Average hourly earnings rose to $18.17 in September, a 0.2 percent increase from the previous month. That was half the pace logged in the previous month. Over the past year, wages have grown 3.4 percent, but paychecks aren't stretching as far because of high food and energy prices.

Interactive Winners and losers A look at who is benefiting and who is suffering from the economic mess.

Strains on Americans were sorely evident. The number of consumer bankruptcy filings rose about 29 percent in September from a year ago, the American Bankruptcy Institute reported Friday.

The financial crisis that intensified in September is forcing a seismic shake-up on Wall Street.

Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. AIG was thrown a financial lifeline. And, the last two investment houses — Goldman Sachs and Morgan Stanley — decided to convert themselves into commercial banks to better weather the financial storms. The number of banks that have failed this year are up sharply from last year. On Friday, Wachovia Corp. said it will be acquired by Wells Fargo & Co. wiping out Wachovia's previous plan to sell its banking operations to rival suitor Citigroup Inc.

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