WASHINGTON — The credit crisis has eased, but the bad news for the American worker may just be beginning.

Employers slashed jobs from one end of the economy to the other in October, pushing the unemployment rate to 6.5 percent — the highest level in 14 years — and makes a deep recession a virtual certainty.

No sector of the economy was immune from the decline. The biggest losses were in manufacturing and construction, but they were joined last month by big cuts in retail trade, financial services, and leisure and hospitality.

Employers shed 240,000 jobs in October, and the toll in September was far worse than previously recorded: 284,000, up from an initial reading of 159,000.

"It seems that firms had previously been cutting back employment only gradually, being cautious on hiring but not aggressive on firing," said Nigel Gault, chief U.S. economist with consulting firm Global Insight. "They have now decided that the recession will be deeper than feared, and are acting more aggressively on firing, as they see demand for their products falling rapidly."

The economy must normally create about 100,000 jobs a month just to keep pace with population growth. So far this year, the economy has shrunk by nearly 1.2 million jobs, according to the Labor Department.

That pushed the unemployment rate 0.4 percent higher in one month, rising from 6.1 percent in September to 6.5 percent in October — a sign that employers, facing slackened demand for their goods and services, are responding by cutting jobs.

Even two of the more robust employment sectors — healthcare and government, which pays for public servants including teachers and police — grew more slowly than in the past.

The last time the unemployment rate was so high was in March 1994 when the economy was still struggling to recover from a recession.

The situation facing workers is even worse when so-called discouraged workers are factored in — 11.8 percent in October, the Labor Department estimated, up from 11 percent in September. Officially the unemployment rate only counts those who have lost employment and are actively looking for new work; it does not include those who have stopped trying or are working part-time because they can't find a full-time job.

LONGER LAG

Jared Bernstein, a labor economist with the Economic Policy Institute, noted that job losses are a "lagging" phenomenon. That is, unemployment tends to peak well after the economic shocks that cause it, and take longer to abate even after the economy recovers.

He noted that the lag has lengthened in recent business cycles, taking roughly two years after a recession for the economy to regain the lost jobs.

"Employers often wait to be sure that the economy is really tanking before laying people off in earnest. And they want to be quite sure that consumers are back before they take on other workers," Bernstein said. "Unfortunately, that lag has gotten a lot longer in recent years."

Deteriorating conditions for U.S. workers are likely to intensify calls for Congress to pass another economic stimulus package.

"When the private sector engine stalls, the public sector engine needs to kick in," Bernstein said.

A critical factor in a recovery will be whether the financial shocks of the past few weeks and months have forced consumers to rethink their spending and savings habits.

Americans appear to be increasing their savings for the first time in years, notes Ed Leamer, director of the UCLA Anderson Forecast. That is probably wise for consumers whose assets have lost value and workers fearful of losing their jobs, but it robs the economy of its major driver: about 70 percent of the nation's Gross Domestic Product is composed of consumer spending.

Leamer said that much of last spring's stimulus payments went to savings or paying down debt, and consumers are more inclined now to save extra cash, not spend it.

The trick in devising a new stimulus, he said, would be to help consumers spend a little more in the short run while learning to increase their savings over time.

HIGHER RATE FORECAST

Many economists believe the unemployment rate will climb to 8 percent or 8.5 percent by the end of next year before slowly drifting downward. Some think unemployment could even hit 10 percent or 11 percent — if an auto company should fail.

Workers with jobs saw only modest wages gains in October. Average hourly earnings rose to $18.21, a 0.2 percent increase from the previous month. Over the past year, wages have grown 3.5 percent, but paychecks aren't stretching far because high food, energy and other prices have propelled overall inflation at a faster pace.

In the 1980-1982 recession — considered the worst since the Great Depression in terms of unemployment — the jobless rate rose as high as 10.8 percent in late 1982 just as the recession ended, before inching down.

Wall Street revived somewhat yesterday after two days of big losses. The Dow Jones industrials rose 248 points. But yesterday's report was worse than analysts had been forecasting: a jobless rate of 6.3 percent with payrolls falling about 200,000.

Factories, including auto makers, construction companies, especially home builders, retailers, mortgage bankers, securities firms, hotels and motels and educational services, all cut jobs.

The grim numbers spurred calls from Democrats on Capitol Hill to provide fresh relief. House Speaker Nancy Pelosi said Democrats, in a lame-duck session later this month, will push to enact another economic stimulus package of around $100 billion, possibly including provisions to create jobs through big public works projects.