Separately, the nation's largest retailers said their March sales fell sharply below expectations. Wal-Mart Stores Inc., Kohl's Corp. and Target Corp. suffered from the economic malaise. While they haven't packed it in yet, they are retrenching, and if that continues the economy is going to unravel. Most economists believe, however, that the economy still managed to grow during the first three months of 2001, but probably not by much. Given that the economy was booming in the first half of last year, the swiftness of the economic slowdown has jolted many Americans.
People see a bear market, layoff announcements, earnings warnings.
Another report provided fresh evidence of how the weak economy is taking its toll on the labor market. The Labor Department said new claims for state unemployment insurance rose last week by 9,000 to a seasonally adjusted 392,000, the highest level since March 30, 1996. With employers' appetite for workers waning, economists expect the nation's unemployment rate, now at 4.3 percent, to rise to 4.5 percent or possibly higher in the coming months. Trying to stave off recession, the Federal Reserve slashed interest rates three times this year, totaling 1.5 percentage points. Economists expect another rate reduction of half a point either before or at the Fed's next scheduled meeting May 15.