US economy loses jobs again

It is getting hard to deny that the US economy is falling into a recession. From MarketWatch:

In the clearest suggestion yet of a recession, U.S. nonfarm payrolls fell by 63,000 in February, the second straight decline, the Labor Department reported Friday...

In addition to February's dismal result, payrolls for December and January were revised down by 46,000. Read the full report...

The unemployment rate fell unexpectedly to 4.8% in February from 4.9%, but the decline didn't reflect strength in the jobs market, but rather was due to a 450,000 decline in the labor force, the largest drop in nearly five years.

Predictably, stocks did not do well yesterday. MarketWatch reports:

U.S. stocks were hammered Friday, pushing the Dow industrials to their lowest close since Oct. 11, 2006, after February's unemployment report cemented thinking of a recession, and central bank moves to stem the credit crunch failed to offset the damage...

The Dow Jones Industrial Average declined 146.70 points to 11,893.69, giving it a weekly loss of 3%. Since the year began, the blue-chip index has lost more than 1,370 points, declining 10% in value...

The S&P 500 fell 10.97 points to 1,293.37, down 2.8% on the week, while the Nasdaq Composite shed 8.01 points to 2,212.49, off 2.6% on the week.

The Fed tried to help.

Attempting to soften the pre-open employment report blow, the Federal Reserve announced two steps to add cash to the bank system shortly before the data, saying it would bolster the amount of its loans to banks this month. See the Fed.

But the market still thinks a big rate cut is what is needed.

On the Chicago Board of Trade, odds of a 75 basis-point interest rate cut to 2.25% jumped, with the April fed funds futures contract rising to 97.74 from a settlement Thursday of 97.69, with the most recent contract implying about a 96% chance of a 75 basis-point cut.