Job losses mount, recession feared

By Joanne Morrison

WASHINGTON (Reuters) - Employers cut payrolls in March for a third straight month and the jobless rate jumped to a 2-1/2-year high, further evidence that a housing downturn and credit crisis may have pushed the economy into recession.

The Labor Department on Friday said nonfarm employment fell by 80,000 jobs in March, more than expected and the biggest drop in five years. Financial markets saw this as reinforcing the need for further Federal Reserve interest rate cuts.

It was the first time the U.S. economy had shed jobs for three consecutive months since a five-month string in 2003, when the economy was mired in a recovery from the 2001 recession which created few jobs.

"The odds that it will turn out that a recession started in the early part of this year have certainly been rising," said Harvard professor Jeffrey Frankel, a member of the private-sector panel that dates U.S. recessions.

While members of the National Bureau of Economic Research's Business Cycle Dating Committee have been in communication, the panel has yet to call a recession.

"No sign that a recession has begun yet," said Northwestern University professor Robert Gordon, a member of that panel.

Adding to the bleak picture, the Labor Department said a total of 152,000 jobs were lost in January and February, sharply above the prior estimate of 85,000, and the jobless rate jumped to 5.1 percent from 4.8, the highest since September 2005.

Most economists, having seen a third monthly decline, were now convinced that the economy is in recession.