Squeezed by tight credit and plunging spending power, the American economy is shedding jobs at the fastest pace since 2001, and the losses could accelerate to levels not seen since the deep recession of the early 1980s.

Employers shed another 240,000 jobs in October, the government reported Friday morning, the 10th consecutive monthly decline and a clear signal that an accelerating slowdown is assailing households and businesses.

Since August, the economy has lost 651,000 jobs - more than three times as many were lost from May to July. So far, 1.2 million jobs have been lost this year.

”Clearly, these are very bad numbers,” said Nigel Gault, chief domestic economist at IHS Global Insight.

”Businesses had been paring back for most of the year, but I suspect that it had been more caution on hiring rather than firing,” Gault said. “In September, they decided, “OK, look, this isn't just a mini-recession, this is a full blown recession. We better take some action.' And they did.”

The unemployment rate climbed to 6.5 percent, the highest level since 1994 and up from 6.1 percent the month before.

The Labor Department also steeply revised down its employment numbers for the third quarter. Employers slashed 284,000 jobs in September, far higher than the 159,000 that was initially reported. In August, 127,000 jobs were lost, compared to the previous estimate of 73,000.

”The U.S. consumer, which for so many years was the global engine of growth, is now the world economy's Achilles heel,” Joshua Shapiro, an economist at MFR, a research firm, wrote in a note.

Above all, the latest monthly snapshot of the jobs market reinforced how the economy remains gripped by a potent combination of troubles - plunging housing prices, tight credit and shrinking paychecks - with all three operating at once in a downward spiral.

Companies have been hiring tepidly and laying off workers throughout the year as business has slowed, while cutting working hours for those on the payroll. Millions of Americans accustomed to borrowing against homes to finance spending have lost that artery of cash as home prices have fallen.

Wages have effectively shrunk for most workers, as rising costs for food and fuel have more than absorbed meager increases in pay. That has further crimped American proclivities to spend.

In October, weekly wages for rank-and-file workers - those not in supervisory or managerial positions - grew just 2.9 percent from October 2007, well below the rate of inflation.

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