heading for a recession

The US Labor Department reported today that the unemployment rate rose to 5% in December from 4.7% in November, and 13 thousand jobs were created last month where 70 thousand had been expected. The unemployment rate is the highest in two years and job creation the lowest in 5 years.

Strained by a credit crunch and a housing slump, the prevailing sentiment is now that the US economy is heading for a recession and President Bush is preparing a stimulus package to be announced later this month.

At mid-session on Wall Street stocks were falling sharply while European bourses closed with losses of nearly two percent. The dollar was falling to 1.48 per euro approaching its historical minimum of 1.49 set in December. Oil retreated to $97.5 per barrel. Overnight in Japan, the Nikkei stock average fell by more than 4%.