Though the Bush administration touts a low unemployment rate, these are subpar years for job creation in America. The August jobs report, the worst in four years, marked a rare net decrease in the number of employed workers.

For an economy that creates about 50,000 to 100,000 more jobs each month than it loses, the announcement that the net number of employed decreased by 4,000 jobs in August clearly riled investor – and worker – confidence too. Wall Street didn’t see this coming; which, as we know, only makes matters worse.

The Economist magazine this week finds the American economy guilty of all charges: “Whatever your opinion of the health of America’s economy was a couple of days ago, it should now be a lot gloomier.” Should it?

Of course, everyone knows the score. The mortgage industry’s implosion is taking its toll on the economy and on credit. Construction workers – and the mortgage industry itself – have been kicked hard. Countrywide Financial Corp.’s recent announcement that it will slash 12,000 jobs – about 20 percent of its workforce – is not the last we will hear of mortgage industry layoffs.

“A weaker labor market, in turn, is likely to worsen the housing bust as more people find it hard to pay their mortgages,” says the Economist. “Pile a sharp tightening in credit conditions on top and recession seems all too plausible.” Other reports suggest that the unemployment rate could rise to five percent by year’s end.

Was August a blip or has the job market turned a corner for the worse? Does this employment report signal the start of a recession? Watch for the Fed to cut interest rates on Sept. 18th.  A rate cut may help rejuvenate home sales and resuscitate the moribund job market, too. Let us know if you or anyone you know has been impacted by the downturn and what you think America should do about it.