Bloomberg reported that US economy probably lost more jobs in February than at any time since 1949, a plunge that may force further reductions in spending and send more Americans into bankruptcy.

According to the median estimates in a Bloomberg News survey ahead of the Labor Department figures, employers cut payrolls by 650,000 and the unemployment rate probably surged to a 25 year high of 7.9%.

Tumbling demand globally is prompting companies from General Motors Corporation to Sears Holdings Corporation to step up firings, perpetuating a vicious circle of job losses and spending cuts.

Mr Ethan Harris co head of US economic research at Barclays Capital Inc said that "We are in almost a panic stage right now. Companies are readjusting their labor force to match a deeply depressed economy."

The report may also show manufacturers cut 200,000 jobs. January’s 207,000 factory payroll reduction was the biggest since 1982. The slump in employment was foreshadowed by first-time jobless claims, which surged last month to the highest level in 26 years.

Automakers, at the forefront of the manufacturing slump, have continued to slash jobs to trim costs and stay in business. General Motors last month said it would cut 47,000 more positions globally as it sought USD 16.6 billion in new US loans.

Banks, retailers and other service companies that make up almost 90 percent of the economy have also been battered. Sears last week said it would close 24 stores, on top of eight closings announced earlier, after its fourth quarter profit fell 55% due to weak holiday sales.

(Sourced from Bloomberg)