The unemployment rate jumped to 9.7 percent in August, the highest since June 1983, as employers eliminated a net total of 216,000 jobs.

The level of job cuts is less than July's upwardly revised total of 276,000 and is the lowest in a year. Analysts expected the unemployment rate to rise to 9.5 percent from July's 9.4 percent, and job reductions to total 225,000.

If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8 percent, the highest on records dating from 1994.

The economy is showing consistent signs of improvement, but probably not enough to stop employers from cutting jobs or to keep the unemployment rate from rising.

The Labor Department is expected to report Friday that the jobless rate increased to 9.5 percent in August, from 9.4 percent in July, as employers cut 225,000 jobs.

The employment report will follow other recent data that shows the economy is pulling out of the worst recession since World War II. A trade group reported Tuesday that the manufacturing sector grew in August for the first time in 19 months, while home sales have increased for several months.

But the economy isn't expected to grow strongly enough this year to persuade companies to ramp up hiring. Most economists expect the unemployment rate to top 10 percent by early next year.

"We have a very long, painful healing process ahead," said Bruce Kasman, chief economist at JPMorgan Chase & Co. "The good news is we're starting it, the bad news is we need much faster growth" to bring the employment rate down.

A loss of 225,000 jobs would be the smallest monthly decline since last year, a sign that layoffs are easing. Employers cut 247,000 jobs in July, compared with an average of 691,000 per month in the first quarter.

Still, the job cuts are holding down wages and salaries, while credit remains tight and home prices and stock portfolios have fallen. All those trends are restraining consumer spending, which makes up 70 percent of the U.S. economy, and could weaken the recovery.

Most retailers posted sales declines last month as shoppers limited back-to-school purchases to focus on necessities. Discounters did better than upscale chains, but the results Thursday raised further concern about the upcoming holiday season.

Other economic news on Thursday was mixed. The Institute for Supply Management, a trade group, said the service sector inched closer to growth in August, but still contracted for the 11th straight month.

The ISM's services index, which covers hospitals, retailers, financial services companies and more, rose to 48.4, up from 46.4 in July. Still, readings below 50 indicate the sector is shrinking.

In a separate report, the Labor Department said the number of laid-off workers applying for benefits dipped to 570,000 last week from an upwardly revised 574,000. That was a weaker performance than the drop to 560,000 claims that economists projected.

The number of people receiving jobless benefits totaled 6.23 million, up 92,000 from the previous week, which had been the lowest level since April.

Economists closely watch initial claims, which are considered a gauge of layoffs and an indication of companies' willingness to hire new workers.

First-time claims have trended down in recent months and are below the recession's high of 674,000, reached in the first week in April. But even with the improvement, they are running at levels well above the 325,000 mark considered a sign of a healthy economy.

Federal Reserve policymakers said in minutes from an August meeting, released Wednesday, that they expect the economy to recover in the second half of this year. But labor market conditions are still "poor," the Fed minutes said, and many companies are likely to be "cautious in hiring" even as the economy picks up.

Many economists credit the Obama administration's $787 billion economic stimulus package of tax cuts and spending increases, along with the Cash for Clunkers program, with helping spur the recovery. But they worry about what will happen when the impact of the stimulus efforts fades next year.

Vice President Joe Biden issued an upbeat report card on the economy Thursday, saying that the massive stimulus program had been more effective "than we had hoped."

Still, consumers are not spending enough to boost retailers' bottom lines. Discounter Target Corp. and warehouse club operators Costco Wholesale Corp. and BJ's Wholesale Club Inc. said Thursday that sales at established stores dropped.

A 5 percent jump at TJX Cos., which operates discount chains TJMaxx and Marshall's, topped expectations. But upscale retailers, including Saks Inc. and Nordstrom Inc., reported a weak month.

On Wall Street, stock indexes rose. The Dow Jones industrial average added about 64 points, as broader indexes also edged up.

More job cuts were announced this week. Washington-based manufacturer Danaher Corp. said it will lay off about 3,300 of its roughly 50,000 employees, an increase from the 1,700 cuts it announced in the spring. American Airlines said it is cutting 921 flight attendant jobs as it deals with an ongoing downturn in traffic and lower revenue.

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How will companies pay for the mountain of dodgy debt maturing soon?

Nearly $1 trillion in risky debt comes due from 2011 to 2015, and even if the credit crunch is long past, companies will likely struggle to refinance it says CreditSights. Expect to see more battles like the current one between General Motors and its creditors.

It’s not just the size of the looming maturities that poses a problem. The central issue is that many of the buyers who helped build the mountain of debt have disappeared. The shadow banking system, the mix of hedge funds and structured investment vehicles, has collapsed, writes Chris Taggert, analyst at the credit research company. Companies with junk debt will have to fight with sturdy, investment-grade companies for survival.

Part of the blame lies with private equity firms like the Blackstone Group and Apollo Management. During their heyday, they bought companies by loading them up with debt. Those bank loans and bonds were sold to other investors, such as hedge funds and collateralized loan obligations that often borrowed to buy them. The days are gone “when one real dollar could easily buy $5 or more dollars of leveraged finance debt,” Taggert writes. Many maturities will come from these companies whose capital structures were layered with debt in 2006, during “the peak of the credit craze.”

Some $936 billion in high-yield bonds and loans will come due from 2011 to 2015. That’s 96% of all leveraged loans and 59% of the entire junk-bond index, CreditSights says.

As a result, there will likely be a rise in fights between creditors and companies similar to the current battle over General Motors debts. Debt swaps, in which companies offer to buy back debt at a steep discount, are suddenly popular with companies trying to escape bankruptcy.

Another $176 billion in credit lines also fall due between 2010 and 2015. Banks are likely to cut credit lines further as long as the economy slumps, much as Bank of America and others have for their credit card holders. Smaller lines of credit can have a ripple effect, Taggert writes: companies push to extend their debt and shorten due dates on what’s owed them. 

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The worse the economy gets, the faster the chip giant plans to move.

BURLINGAME, Calif. -- The economy is in the tank. PC sales are in a funk. And Intel shares have lost more than a third of their value over the past year. So why is Stacy Smith, the chip giant's chief financial officer, smiling?

Hey, you would too if you had $3.5 billion in cash, $4.2 billion in short-term securities, a business with a gross margin of 46% after getting hammered by a recession and a plan to spend billions to upgrade your factories to crank out better products. Sales, meanwhile, are better than they were. "The best sign is what's happening on our order desk," Smith says.

In short, we've now reached the moment the dudes at Intel live for : an opportunity to push forward as competitors are struggling to catch their breath.

Intel's management team will get a little bit of vindication, too, when they invite investors to Santa Clara, Calif., for the company's analyst day next month. Last year, Intel was selling skeptics on the need to begin selling radically cheaper processors. 

Twelve months and one stock-market collapse later, Intel's plan looks smart. Sales of PCs have nosedived, but consumers are snapping up the cheap, Web-friendly notebooks ASUS, Hewlett-Packard and Dell are building around Intel's Atom. "The netbook phenomenon even caught us a little by surprise," Smith says.

Still, after Intel successfully called its shot last year, investors will be paying close attention as Smith outlines this year's big bet--and it's a doozy. Intel plans to spend roughly $7 billion to upgrade its fabs this year, allowing it to crank out processors with features 32 nanometers wide. 

If demand is strong, that could allow Intel to command a premium price for chips built using a process technology its competitors can't match. If demand fades, Intel will take more fabs offline so they can upgrade them to the new process technology more quickly.

In other words: The tougher the economy gets, the tougher Intel gets. "We're going to move as fast as possible to get as much of our capacity as possible on 32 nanometers."

And that will only help Intel move more quickly to its next big opportunity. The plan: shrink the x86 processor design now powering servers and desktop computers enough to assault the market for mobile phones, unlocking a market for Intel many times the size of the netbook market it has conquered.

To be sure, Smith says Intel's push into the smart-phone market will look very different than its drive into netbooks. Intel was able to swallow most of the netbook market in a single gulp, since its Atom processor was able to deliver, almost immediately, the power and energy efficiency needed to run the scaled-down notebook computers.

With smart phones, by contrast, Intel's processors won't play in the entire market at the same time. Intel's strategy hinges on using its process technology to shrink its powerful chips down to a smaller size, making them cheaper and more energy efficient.

So while Intel will begin nibbling at the high end of that market by year-end, it will have to wait two years until it begins cranking out processors with features just 22 nanometers wide for more mainstream phones.

That will give Intel's competitors time. Shares of rival Advanced Micro Devices, for example, have rebounded sharply this year after it shed its capital-sucking chip fabs. Samsung, Texas Instruments and the pack of companies building processors for mobile phones based on ARM's mobile processor designs, meanwhile, are poking into the market for netbook computers.

The worse the economy gets, however, the faster Intel will shrink its processors, and the less money competitors will have to keep up. "Making those investments into the downturn is a huge competitive advantage, and it's one our competitors can't make," Smith says.

So, what can Intel's competitors do? Hope the economy gets better. Fast.

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The rotten economy may have broken Google's string of sequential sales gains, but the search giant's shares surged more than 5% in after-hours trading Thursday thanks to stronger than expected first quarter earnings and year-over-year sales gains.

Google ( GOOG - news - people ) also announced that its longtime sales chief, Omid Kordestani, will be moving to the position of senior advisor to the office of the chief executive and founder. Kordestani will be replaced by Nikesh Arora, now president of international operations, as president of global sales operations and business development.

The moves come after Tim Armstrong, Google's North America sales chief, jumped ship to take the CEO slot at struggling portal AOL in March. Since then Google has laid off 200 employees in its sales and marketing group.

Nevertheless, Google's advertising-driven results stand in stark contrast to those reported by sagging print media titles. The company's net income rose 8.4% in its first quarter to $1.42 billion, or $4.49 cents a share, from $1.31 billion, or $4.12, in the corresponding period a year earlier.

Excluding special items, Google reported earnings of $5.16 per share, beating the consensus estimate of $4.93 reported by Thomson Reuters. After subtracting traffic-acquisition costs, sales rose 10% to $4.07 billion from $3.70 billlion.

However, the results do mark the first sequential sales drop for the online powerhouse, with sales, when not adjusted for traffic-acquisition costs, down 3% from the previous quarter.

Google shares surged $19.52, or 5.02%, to $409.25 in after-hours trading.

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No. 1: Warren Buffett :
( Berkshire Hathaway )
Value of stake: $35.9 billion

There aren't many people who can lose $25 billion in four months and still top the list of the world's wealthiest CEOs, but this year Berkshire Hathaway Chief Warren Buffett returns to the winner's circle, locking in his victory by a landslide.
Berkshire Hathaway has dipped 37% since the fall, yet the Omaha businessman still bests his nearest competitor by $16.2 billion.

No. 2: Lawrence Ellison :
( Oracle )
Value of Stake: $19.7 billion

Business software titan Lawrence Ellison has lost an estimated $5.3 billion on paper since we locked in prices for our 2008 Forbes 400 rankings. Still, Oracle is weathering the storm better than most, falling just 15% in the past 12 months and growing its revenues by 10% in the six months ended Nov. 30, 2008. The Chicago native has been Oracle's front man since the software giant was founded in 1977.

No. 3: Mukesh Ambani :
( Reliance Industries )
Value of stake: $16.8 billion

The elder of the two Ambani brothers makes the list at No. 3 despite a 62% drop since last January in the shares of his petrochemicals giant Reliance Industries. Founded in 1966 by Mukesh's father Dhirubhai Ambani, Reliance today accounts for roughly 3% of India's gross domestic product with revenues of $28.5 billion. Mukesh took full control of Reliance Industries when his late father's holding company split in 2005 following a bitter battle between Mukesh and his estranged brother, Anil, who remains on the list at No. 6.

No. 4: Lakshmi Mittal :
( ArcelorMittal )
Value of stake: $13.2 billion

Indian steel magnate Lakshmi Mittal used a slew of acquisitions to parlay ArcelorMittal into the world's leading steelmaker by output. The 58-year-old consistently has ranked among the top five wealthiest people in the world, but his public holdings of ArcelorMittal took a dive in the second half of 2008, falling 73% since June.

No. 5: Bernard Arnault :
( LVMH Moët Hennessy Louis Vuitton )
Value of stake: $12.2 billion

Since buying luxury house Christian Dior in 1985, French billionaire Bernard Arnault has dominated the luxury market by accumulating la crème de la crème of the fashion and wine and spirits worlds. The 59-year-old impresario ranks as our fifth-wealthiest CEO despite LVMH's 38% decline over the past 12 months. LVMH currently boasts 60 top-shelf brands, including Louis Vuitton, Dom Perignon, Moët & Chandon, Dior, Tag Heuer and Marc Jacobs.

No. 6: Anil Ambani :
( Reliance Communications, Reliance Power, Reliance Capital, Reliance Natural Resources, Reliance Infrastructure )
Value of stakes: $9 billion

In the four years since a spat with older brother Mukesh led to the break-up of their family's assets, Anil, the younger of the two, has grown his telecom, energy and infrastructure businesses apace--only to see his shares decimated by the global economic slowdown. Reliance Communications, his biggest holding, is down 78% since the beginning of 2008.

No. 7 (Tie): Abdul Aziz Al Ghurair :
( Mashreq )
Value of stake: $7 billion

As the head of Mashreq, one of the largest banks in the Arab world, Al Ghurair oversees $25.6 billion in assets. A citizen of the United Arab Emirates, he also serves as president of the Federal National Council, the country's equivalent of congress.

No. 8 (Tie): Steven Ballmer :
( Microsoft )
Value of stake: $7 billion

Microsoft's intrepid chief executive is no stranger to upheaval: Replacing Bill Gates in 2000, Ballmer guided Microsoft through a tech implosion that ravaged some of its competitors and bankrupted others. Nevertheless, the company's lackluster second-quarter results, released last week, have some analysts grumbling about petering growth and a tepid outlook for computer sales.

No. 9: Sunil Mittal :
( Bharti Airtel )
Value of stake: $6.9 billion

Sunil Mittal (no relation to Lakshmi) oversees Bharti Airtel, India's largest mobile phone operator. The self-made 51-year-old founded the company in 1995, along with his two brothers, and has since seen its customer base swell to some 88 million subscribers. With his family, he owns a dominant stake in Bharti Airtel, which is down 30% over the past year.

No. 10: Tadashi Yanai :
( Fast Retailing )
Value of Stake: $6 billion

Forget haute couture--Japanese CEO Tadashi Yanai made his billions selling discount apparel to the masses. His holding company Fast Retailing's premier brand, UNIQLO, has been building momentum in Asia as the premiere destination for affordable fashion and has recently expanded with branches in Paris and New York.

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