Jobs plunge by 63,000, worst since 2003; Fed steps in

WASHINGTON -- Employers cut jobs for a second month in February while the unemployment rate fell as more people quit looking for work in the weakening job market, the government said Friday in a report that led to further calls of a 2008 recession.

President Bush, responding to the report, said "it's clear our economy has slowed, " and he tried to reassure an anxious public that the long-term outlook is good.He also gently urged taxpayers to spend the rebate checks due to them within months from a stimulus package.

Earlier, his top economic adviser, Edward Lazear, acknowledged that it is possible the economy shrank in the current January-to-March quarter. Lazear's comment is the most pessimistic assessment heard out of the White House.

Shortly before the jobs report was released, the Federal Reserve underscored its concern for the economy by saying it will pump more cash into financial markets to try to ease credit.

The Fed said it will raise its planned March 10 and March 24 auctions to $50 billion each, from $30 billion it had previously announced. The auctions serve as short-term loans to get banks the cash they need to keep lending.

Fed officials also said they would move to even larger amounts at future auctions if necessary.

And the Fed announced another effort to ease credit — a series of repurchase transactions expected to reach $100 billion. In those moves, the Fed buys securities, giving the sellers immediate cash.

The move came after the Fed saw an acceleration in the past few days in a deterioration in credit markets that has been underway worldwide for several weeks, senior Fed staff members said. They stressed the move was not in direct response to the jobs report.

Ultimately, the hope is that the added liquidity will help ease lending conditions, which will in turn help the entire economy, the staff members said.

The Fed also reported Friday that consumers increased their borrowing at an annual rate of 3.3% in January, especially relying on credit cards to finance their purchases. That was up from a 1.8% growth rate in December.