Fed to Make $200 Billion Available To Lenders; Bank Seeks to Loosen Credit
The Federal Reserve took strong action yesterday to restore order to frazzled lending markets while a new report showing unexpected job losses underscored the toll that credit markets are taking on the economy.</br></br>The world's financial plumbing is so clogged that the central bank sees a need for new steps to clean it out to prevent severe damage. Mounting panic in the credit markets is making it harder for Americans to get mortgages and is increasing the rates they must pay on credit cards and auto loans. Even solid businesses are finding it difficult to raise money to expand.</br></br>The nation shed 63,000 jobs in February, the Labor Department reported, the second straight month of losses and the worst monthly decline since March 2003. The construction and manufacturing industries continued to shed positions, as they have for months, but the decline broadened to include big job cuts by retailers and temporary help services.</br></br>Forecasters had expected a modest employment gain, and the weak numbers prompted many top economists to conclude that the U.S. economy is now in recession.</br></br>"You've now strung together three months in a row of private-sector job losses," said Stuart G. Hoffman, chief economist of PNC Financial Services Group. "That doesn't happen unless you're in a recession."