The U.S. unemployment rate climbed in March to the highest level since 1983 and the economy lost more than 650,000 jobs for a fourth consecutive month, a sign renewed reductions in spending might slow a recovery. The jobless rate increased to 8.5 percent, as forecast, from 8.1 percent in February, a Labor Department report showed today in Washington. Employers cut 663,000 workers from staff, bringing total losses since the recession began to about 5.1 million, the biggest slump in the postwar era. Evaporating jobs and declining pay mean President Barack Obama's pledge to create or save 3.5 million jobs through tax cuts and government spending may fall short of what's needed to revive the world's largest economy. Federal Reserve Chairman Ben S. Bernanke has conceded joblessness could top 10 percent under a worst-case scenario. ``The labor market has gotten worse,'' Conrad DeQuadros, senior economist at RDQ Economics LLC in New York, said before the report. ``Weak labor-market conditions will result in consumer spending being weak throughout most of 2009.'' The job cuts have been spreading from manufacturers such as Johnson Controls Inc. and Dana Holding Corp. to service providers like International Business Machines Corp. and even the U.S. Postal Service. Revisions subtracted 86,000 workers from January payrolls while's February's drop of 651,000 was not revised. The last time the unemployment rate was at 8.5 percent was in November 1983, when the economy was recovering from the 1981- 82 recession that pushed the rate to almost 11 percent. Then Fed Chairman Paul Volcker boosted interest rates to quell soaring inflation following the 1970s fuel crisis. Forecasts Payrolls were forecast to drop by 660,000, according to the median of 80 economists surveyed by Bloomberg News. Estimates ranged from losses of 525,000 to 750,000. Forecasts for the jobless rate ranged from 8.2 percent to 8.7 percent. Today's report showed factory payrolls fell by 161,000 after declining 169,000 in the prior month. Economists forecast a drop of 160,000. The decrease included a loss of 17,500 jobs in auto manufacturing and parts industries. The manufacturing slump that began more than a year ago may intensify should General Motors Corp. be forced into bankruptcy, economists said. As many as 1 million additional auto-industry jobs may be lost and the unemployment would climb to 11 percent, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. Auto Industry The auto slump has already rippled through the industry. Johnson Controls, a maker of car interiors and batteries, said last month it will shut 10 factories and cut about 4,000 jobs. Dana, the truck-axle manufacturer that exited bankruptcy in 2008, said it will boost its payroll reduction to 5,800 this year, 800 more than previously announced. ``We are taking the difficult actions necessary to survive,'' Dana's Chief Executive Officer John Devine said in a March 16 statement. Service industries, which include banks, insurance companies, restaurants and retailers, cut 358,000 workers after a 366,000 decline in February. Financial firms cut payrolls by 43,000, after a 44,000 decrease the prior month. Retail payrolls decreased by 47,800 after a 50,800 drop. Payrolls at builders fell 126,000 after decreasing 107,000, as home construction and sales remain weak. Government payrolls decreased by 5,000 after a gain of 3,000 the prior month. Postal Cuts Among government job cuts that are still on the way, the Postal Service said March 20 it will close six offices and offer early retirement to about 150,000 workers in a bid to cut costs. The population count that happens once every 10 years may limit the damage. The U.S. Census Bureau began hiring 140,000 temporary employees this month to start conducting the 2010 census. They are the first of more than 1.4 million people it will hire over the next year to poll the population. For many Americans, this employment slump has been an unfamiliar experience. Sarah Opple, 42, was fired in February from a sales position at Gaylord Hotels in Chicago after holding a series of jobs in the hospitality industry since she was 17 years old. ``It's more real to me now,'' she said in a March 26 interview. ``This recession is way more tangible than the others. It makes everyone feel they could be next." Employers are also cutting back on hours. The average work week shrank to a record 33.2 hours in March from 33.3. Average weekly hours worked by production workers fell to 39.3 hours from 39.5 hours, while overtime was unchanged at 2.7 hours. That brought average weekly earnings down to $614.20 from $615.05. Stimulus Measures Workers' average hourly wages rose 3 cents, or 0.2 percent, to $18.50 from the prior month. Hourly earnings were 3.4 percent higher than March 2008. Since taking office Jan. 20, Obama has enacted a series of measures aimed at stemming the recession. He signed into law a $787 billion stimulus plan on Feb. 17 that included spending on infrastructure projects to boost hiring. The Treasury Department is also moving to repair the damaged financial system and lower record foreclosures, while the Fed is flooding markets with cash to boost borrowing and spending. Bernanke last month said it was ``certainly well within the realm of possibility'' that unemployment nationwide could rise above 10 percent ``for a period.'' That's the assumption being used in a worst-case scenario in tests to determine the health of the banking system, he said.

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