Jobs lost. Dollar down. Housing Worse. Hold Onto Hats.

A new jobs report from the Labor Department, and the picture it paints is bleaker than expected.

...the Labor Department's February jobs report said U.S. payrolls fell 63,000 after a 22,000 net job loss reported in January.

Economists surveyed by Briefing.com were forecasting a narrow 25,000 gain.

This is the first time we've had two straight months of decline since the first Iraq-powered downturn in the economy in 2003.  Jobs were not only lost in manufacturing and construction (a sector that singlehandedly has lost more than 300,000 jobs since housing started to slump) but across the board, including sectors where gains had been expected.  

Oddly enough, the unemployment rate actually fell this month.  Why?  Because the job situation has now become so tight that hundreds of thousands of people have given up even looking for a job.

The economy is now caught between a rock and an even harder rock.  On the one side, the housing market continues to crumble.  

Foreclosures are at a record high. Home equity is at a record low. The housing market is spiraling down with no end in sight — and taking people's sense of economic security with it.

That's putting tremendous pressure on the Federal Reserve to lower interest rates and make more cash available.  And yet, even talk of lowering interest rates generates another problem.  

Oil traded near a record after the dollar fell to its lowest-ever level against the euro, prompting investors to buy commodities including crude. ... "Further weakness in the U.S. dollar should likely lift oil prices," said Commonwealth Bank's Moore. "There is a direct valuation effect associated with U.S. dollar depreciation and also you have people viewing commodities broadly as offering a hedge against dollar weakness."

Rising oil prices are directly visible at the pump, and more and more visible elsewhere.  For years, pro-globalization economists have been preaching the idea that shipping manufacturing to the country most willing to endure poverty and pollution provided a buffer against inflation.  No more.

Central bankers from the U.S. and Europe said globalization may no longer be cooling inflation, underscoring the risk of rising consumer prices even as the world economy slows.

Increased food and energy costs and greater demand from emerging markets such as China are pushing up prices after a period known as the "Great Moderation" in which growing trade and low-cost production from developing nations helped contain growth in consumer prices.

Even in normal times, such a confluence of economic ills would be a tough job for the nation to weather.  This time, it's going to be even harder, because every dime we might use to provide flexibility in dealing with this issue is being spent in Iraq.