HozNews

WASHINGTON (AFP) - - Data pointed to a deepening recession in the US economy as more job cuts were announced, while governments debated stepped-up stimulus plans and measures to protect their domestic markets.

Leading US retailer Macy’s meanwhile announced 7,000 job cuts as it streamlined operations to cope with a deepening recession that has dampened consumer spending.

The news came hours after the Commerce Department said US consumer spending fell 1.0 percent in December from the previous month, while incomes dropped 0.2 percent.

“The consumer is retrenching,” said Nigel Gault, chief US economist for IHS Global Insight. “Incomes are falling, credit is tight, and wealth has fallen with the tumbling stock market and lower house prices.”

The United States is facing prolonged recession after a housing mortgage crisis sparked financial turmoil across the globe and caused a severe economic downturn.

Even though a key index showed Monday that US manufacturing activity contracted less than forecast in January, economists were not impressed.

The Institute for Supply Management’s benchmark index rose to 35.6 in January from 32.9 in December but “in all probability this is nothing more than noise,” said Ian Shepherdson, chief US economist for High Frequency Economics.

“There is no reason for any sustained improvement — that is, a slowing in the rate of contraction — in the manufacturing sector anytime soon,” he said.

US President Barack Obama unveiled a new version of his stimulus plan intended to inject 888 billion dollars into the recession-crippled US economy, with most of the money devoted to infrastructure spending.

The president told supporters that “the economic crisis is growing more serious every day, and the time for action has come” as the Senate took up the measure.

“It’s not enough for this bill to simply pass Congress. Americans need to know how it will affect their lives,” Obama wrote in the message.

“They need to know that help is on the way and that this administration is investing in economic growth and stability.”

Republicans remained cool to the proposal, and the Senate’s top opposition leader called for the scrapping of a “Buy American” clause in the bill that has drawn ire from US trading partners.

“I don’t think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy,” said Senator Mitch McConnell.

In Britain, wildcat strikes against foreign workers resumed at nuclear facilities, oil refineries and power plants, fueled by fears of rising job cuts amid the global slowdown.

At least 600 contractors at the Sellafield and Heysham nuclear plants in northwest England were among the latest wave of workers to join the protests which flared last week.

They and others came out against the use of around 100 Italian and Portuguese contractors on a building project at the Lindsey oil refinery, owned by French oil giant Total, in eastern England.

“This attempt at discrimination is absolutely unacceptable to the Portuguese government,” said Lisbon’s Foreign Minister Luis Amado.

“We want to underline the responsibility of government to avoid this protectionist, xenophobic, nationalist trend, which if not quickly curbed by strong government action, could lead us into an even deeper crisis,” Portugal’s top diplomat said.

Italian Foreign Minister Franco Frattini also described the action as “indefensible.”

Germany said it would host crisis talks among European leaders ahead of the Group of 20 summit in London while French President Nicolas Sarkozy was reported to be seeking a separate summit of eurozone countries to forge greater unity.

The German government said it was considering bank “nationalizations” and “expropriation” to avoid bankruptcies in the crisis while the Spanish government urged banks to start lending again to relieve the economic pressure.

French Prime Minister Francois Fillon unveiled new measures as part of the government’s 26-billion-euro (33-billion-dollar) economic stimulus plan but the mood remained downbeat.

“I’d be extremely astonished if we have positive growth in 2009, let’s be realistic,” French Finance Minister Christine Lagarde told reporters.

But the biggest shock on Monday came from figures coming out of China, the world’s third biggest economy after the United States and Japan and an increasingly important player in the unfolding crisis.

China said that about 20 million rural migrants were now out of work — more than triple the number announced last month — in an indication that the slowdown was intensifying.

Large numbers of Chinese workers have lost their jobs as global demand for the cheap Chinese consumer goods they make has fallen off sharply, forcing thousands of factories to shut their doors.