The world’s largest economy is faltering, with the number of jobs in the United States falling for the first time in four years, official figures indicated yesterday.

The jobs data, which came in far worse than expected, mark the clearest sign yet that the US housing slump and the crisis in America’s credit markets are threatening growth and risk tipping the economy into a recession. Last month American employers dismissed 4,000 workers, marking a sharp change of direction from the 68,000 jobs that had been created in July. The figure triggered a 250-point fall in the Dow Jones industrial average and dragged the FTSE 100 down 122 points to 6,191 for a 2 per cent decline for the week.

Traders were also spooked by comments from Alan Greenspan, the former chairman of the US Federal Reserve, that the market turmoil is in many ways identical to conditions during the stock market crash of 1987, and of 1998, when the hedge fund Long Term Capital Management was on the brink of collapse. At a dinner on Thursday, Dr Greenspan pointed out that today’s market conditions were being driven by fear.

Later, Henry Paulson, the US Treasury Secretary, acknowledged that the employment statistics were not “the kind of number I like to see”, but he sought to reassure the markets by saying that he expected the American economy to continue to grow in the second half of the year.

The employment numbers released yesterday raise the pressure on the US Federal Reserve to cut rates by half a percentage point, rather than the quarter-percentage point that Wall Street has been expecting when the bank meets on September 18.

The dollar tumbled to a 15-year low against important currencies as traders bet on the prospect of lower rates. The pound traded as high as $2.0323.

Kevin Logan, economist at Dresdner Kleinwort in New York, said: “I reckon the likelihood of a recession is about 40 per cent. The economy is certainly susceptible to a recession, but it needs a shock to push it over.”

Carl Weinberg, of High Frequency Economics, said that the employment numbers were retrospective. “The real issue is whether a credit crunch will extend to household and corporate spending,” he said.

Mr Weinberg criticised the Fed for not cutting US interest rates – at present 5.25 per cent – earlier. “The Fed should have started cutting ages ago,” he said. “They ought to cut by 50 basis points [half a percentage point] now, but that would look like panic, so they will probably cut incrementally.”

In a sign of the widening fallout from the housing crisis, Countrywide Financial, America’s biggest mortgage lender, announced that it would cut up to 12,000 jobs in the coming months, about 20 per cent of its staff.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive