The U.S. job market took its heaviest hit in more than two decades, as 415,000 jobs were lost for the month and unemployment jumped to 5.4 percent, according to a report released Friday from the Department of Labor.
Faced with quickly rising unemployment, U.S. political leaders called for quick passage of an economic stimulus package, though political differences continue between the GOP and Democrats as to what shape such a measure should take.
"It's not good news for America," Bush said. "The attacks of Sept. 11 have deeply affected the lives of hundreds of thousands of people."
Democrats and Republicans in Congress said the new unemployment data underscores the advantages of their own priorities in legislation designed to help stimulate the economy.
Senate Republican leader Trent Lott, R-Miss., said the plan advocated by Bush would do the most to generate new jobs. "The most important aspect of the president's national job security initiative is that it creates jobs to help Americans recover and rebuild. It's not to give folks a check for today, but to give them a job for tomorrow."
But Democrats said the new numbers also show that Congress must do something to directly help the citizens behind the new unemployment data.
Senate Finance Committee Chairman Max Baucus, D-Mont., said that any economic stimulus plan must include, "true unemployment and health care assistance for millions of out-of-work Americans."
Senate Majority Leader Tom Daschle, D-S.D., also pressed for large-scale unemployment assistance in the proposed economic stimulus package.
"More than half of unemployed Americans do not qualify for unemployment insurance, and the vast majority cannot afford health coverage under our current system. We should be helping those who need it the most, not those who need it the least," Daschle said.
This was the first report to reflect some economic effects from the Sept. 11 terror attacks, which beyond the immediate destruction and loss of life have caused a broad and sudden economic downturn in what was already a flagging U.S. economy.
The 5.4 percent unemployment rate reported by the Labor Department was a jump of a half-percentage point from September's 4.9 percent unemployment rate.
"The labor market had been weakening before the attacks, and those events clearly exacerbated this weakness," the report said. "It is not possible, however, to quantify the job-market effects of the terrorist attacks."
The numerical job loss in the non-farm category for October was the largest drop for any given month since May of 1980, when 464,000 jobs were cut from U.S. payrolls. The Labor Department said the losses in October were spread across most industry groups, with particularly large declines in manufacturing and services.
The payroll loss of 415,000, brought the total number of people employed in the United States to 131.8 million, seasonally adjusted.
Wall Street analysts expected an unemployment rate of 5.2 percent, with the market reacting with modest negativity in early trading Friday.
Investors pressured the markets slightly down as they began dumping stocks based on concerns for the state of the U.S. economy and the potential for an economic recovery in the near term.
The Labor Department's employment report comes on the heals this week of other negative economic numbers including a report Thursday showing a steep decline in the U.S. factory sector, and Wednesday, sharp pullback in U.S. gross domestic product.
The National Association of Purchasing Management, an influential private research group, said Thursday that the U.S. factory sector has hit nearly a 10-year low, pulled markedly downward by the effects of the Sept. 11 terror attacks.
According to NAPM's monthly "Report on Business" its key gauge of manufacturing orders -- the purchasing managers index -- dropped to 39.8 in October, steeply down from September's 47.0 number. This was the largest single drop during a contraction phase of the index and NAPM's lowest reading of its index since February of 1991.
Wednesday's GDP report which showed that U.S. total output decreased at an annual rate of 0.4 percent for the third economic quarter ended Sept. 30, according to a release from the Commerce Department's Bureau of Economic Analysis.
Real GDP -- the total output of goods and services produced by labor and property located in the United States -- fell from the second economic quarter when it increased by 0.3 percent.
This was the first such contraction since 1993, and the largest drop since the recession of 1991 when GDP fell at a 2 percent annual rate in the second quarter.
Friday's marked jump in unemployment along with the steep decline in the manufacturing sector, are in particular expected by Wall Street to hold sway at next week's regular meeting of the chief policy making committee of the U.S. Federal Reserve.
Many economic experts now forecasting the Fed will cut the key U.S. lending rate by another half-percentage point -- which would be its 10th such cut -- lowering it 2 percent, in order once again to attempt to jump start the U.S. economy and restore consumer confidence.
(with reporting by Kathy Gambrell and Mark Benjamin in Washington)