As states and Congress move to make e-tailers collect sales taxes, Overstock.com and eBay oppose them while Amazon.com calls for uniformity

By Olga Kharif

Amazon tax fever is spreading. In the months since a New York State law took effect that imposes sales taxes on products promoted through Web sites based in the state, other governments have moved to get in on the action, and online retailers aren’t happy.

Last year, New York became the first state to pass legislation requiring large Web-based retailers, including Amazon.com (AMZN) and Overstock.com (OSTK), to collect state sales taxes on products promoted through affiliated state-based Web sites. Cash-strapped states across the country are mulling similar legislation and a federal online-sales tax bill that may be introduced in Congress could be signed into law as early as this year.

The growing impetus for taxes on online goods has touched off a flurry of lobbying activity and lawsuits from online retailers hoping to defeat legislation that would take away some of the price advantage they enjoy over brick-and-mortar retailers. “”We’ll do everything in our power to assist our sellers so they are not harmed,” says Tod Cohen, deputy general counsel and vice-president for government relations at eBay (EBAY). “We want to make sure than small businesses aren’t strangled in their cribs.”

State Sales tax collections are down

States and local governments hope sales taxes would help them recoup part of the revenue lost amid a recession that has diminished property values and crimped demand for items sold in stores. In the fourth quarter, state sales tax collections dropped 4%, the steepest decline in 50 years, according to the Nelson A. Rockefeller Institute of Government. Online sales taxes could help states generate at least $52 billion in added revenue over the next six years, according to an Apr. 13 study conducted by three University of Tennessee professors. Requiring virtual stores to collect taxes, even in parts of the country where they don’t have physical operations, would also place e-tailers on a more even footing with brick-and-mortar stores such as Wal-Mart (WMT), which collect sales taxes on in-store as well as online purchases.

Companies that sell products over the Internet say the taxes would hamper growth. “The introduction and passage of an Internet tax bill would have adverse effects on e-commerce,” George Askew, an analyst at Stifel Nicolaus , wrote in a recent note. After New York’s law was passed, Overstock.com says it had to terminate agreements with some 3,400 Web sites that once promoted the closeout retailer in the Empire State.

Overstock ceased operating in New York altogether, says the company’s president, Jonathan E. Johnson III. After losing a court battle seeking to repeal the law, Overstock plans to file an appeal in the coming weeks, Johnson says. “These states are signing up for a lawsuit, or for businesses to pull out of their states,” he says.

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Cover the E-Tailers collection costs?

Overstock, along with eBay, is leading the charge against efforts on Capitol Hill that favor online sales taxes. Senator Mike Enzi (R-Wyo.) and Representative Bill Delahunt (D-Mass.) are expected to introduce a bill aimed at overturning Quill vs. North Dakota, a 1992 Supreme Court case that concluded states can only require retailers to collect state taxes in territories where they have offices or stores. If passed, the legislation could require all but the smallest retailers to collect sales taxes in the 23 states that are part of the so-called Streamlined Sales Tax Project, which unifies states that have agreed to simplify their sales tax laws. The number of states in the Project is expected to rise rapidly in the coming months.

Under the bill, which is still being drafted, the states would compensate e-tailers for the cost of collecting taxes, and would agree not to prosecute them for tax errors, removing much of the liability, says Neal Osten, federal affairs counsel at the National Conference of State Legislatures, which is helping to draft the bill. Stifel analysts are skeptical that the bill will pass, though they believe it will make more headway in the current Democratic-controlled Congress. “The effort appears to have a somewhat better chance than in prior Congresses,” Blair Levin, managing director at Stifel, wrote in a recent report.

Laws that vary by state would no doubt be a headache for companies that sell products online across the country. In the coming days, Minnesota’s House of Representatives is due to consider a bill introduced by Representative Jim Davnie that would levy a sales tax on digital downloads of e-books, music, movies, and even ringtones. The tax would affect a wide range of tech companies, including Microsoft (MSFT) and Apple (AAPL). “There’s clear opposition from the IT industry,” Davnie says. “Apple, Microsoft have been in my office.” Microsoft declined to comment for this story. Apple couldn’t immediately be contacted.

Amazon.com Wants Tax Uniformity

Some Internet players oppose pro-tax efforts by local governments too. Priceline.com (PCNL) has about 50 lawsuits pending that involve various cities and counties trying to impose local hotel occupancy taxes on the site’s customers, says Darrel Hieber, partner at law firm Skadden, Arps, Slate, Meagher & Flom, which has represented Priceline in such cases since 2004.

While Amazon.com opposes the New York State law, it supports efforts to impose taxes in a uniform manner. “We’d be O.K. with a mandatory collection requirement as long as the states’ tax systems were truly simplified and the collection evenhandedly applied,” Amazon.com spokeswoman Patricia Smith writes in an e-mail. Many small businesses are also making peace with the notion. “We think it’s fair for people to collect sales taxes on the same terms [as brick-and-mortar small businesses],” says Todd McCracken, president of the National Small Business Assn. “There’s a need for a comprehensive, national approach to this. There’s got to be some final resolution to this because these issues have been festering for years.”

Five Best Malware Removal Tools

By Jason Fitzpatrick, 9:00 AM on Sun Apr 26 2009

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On Thursday we asked you to share your favorite tool for purging malware from your computer. We’ve tallied the votes and we’re back with the top five contenders for best malware removal tool.

The internet—unfortunately—isn’t a never-ending buffet of secure open-source software and Bollywood-style musicals starring LOLCats. There are people and organizations that delight in stealing your personal data, hijacking your computer, and making a general nuisance of themselves through malicious software. This week we’re highlighting the top five tools for removing software with ill-intentions from you PC.

Spybot Search & Destroy (Windows, Freeware)

Spybot Search & Destroy has made quite a name for itself over the years, earning accolades from both general and computer-focused publications. Spybot Search & Destroy is the highest ranked freeware tool at 2Spyware.com, a website that ranks malware removal tools. In addition to scanning for malware, Spybot Search & Destroy also has a variety of additional functionality, including a botnet scanner, hosts-file modification (to keep malware from calling home), a secure file shredder, and a dummy code feautre (it replaces malicious or questionable adware modules with inert code so the dependent program will keep functioning). As an added bonus Spybot Search & Destroy is compatible with every version of Windows dating back to Windows 95.

SUPERAntiSpyware (Windows, $30)

SUPERAntiSpyware is available as both a freeware and premium edition like Malwarebytes’ Anti-Malware (see below), but the level of restrictions on the freeware edition are considerably higher. The free version is limited to basic on-demand scanning and malware removal. The premium version includes real-time scanning, registry protection, a scheduling service, auto-scan on startup, and 50 startup diagnostics to stop malware infections before they spread. One of SUPERAntiSpyware’s strongest selling points is its high level of compatibility with other protection tools like Avira, Kaspersky, Symantec, and McAfee. In most cases it can be run along side other tools without any conflict.

ComboFix (Windows, Freeware)

ComboFix is just as spartan as the screenshot here makes it look. You download ComboFix, run it, and it takes care of the rest. The basic ComboFix process looks like this: It backs up your registry, checks to see if you have Windows Recovery Console installed, and then it goes to town on your system scanning away through 40+ stages. When it’s done, ComboFix spits out a log file and lists all the malware it found, which ones it was able to remove, and which ones you’ll have to use your Google-fu to look up how to remove manually. It isn’t fancy, but it gets the job done and gives you a detailed report at the end to take to security forums for help if you need it.

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Malwarebytes’ Anti-Malware (Windows, $25)

Malwarebytes’ flagship application Anti-Malware is a shareware malware-removal tool. The principle difference between the free and premium version of the application is real-time monitoring. If you don’t need active scanning against threats, the free version uses the same database and does an admirable job ferreting out infections. Anti-Malware was, for example, one of the few malware removal tools that could detect and remove the Antivirus XP 2008, a spyware application that masqueraded as an antivirus app. The Anti-Malware installation includes another application from Malwarebytes called FileASSASSIN—a helpful tool for deleting files locked by Windows.

HijackThis (Windows, Freeware)

HijackThis stands alone in this Hive Five as being the least automated yet most likely to completely wreck your system if used incorrectly. HijackThis does a comprehensive scan of the state of your computer and reports back an enormous log file. The tool makes no judgement on whether or not an application, browser modification, or registry entry is malicious or not. It simply generates a list of things that could have been potentially altered or tampered with by spyware, malware, or other malicious programs. Advanced users can look over the log themselves and determine what needs to be pruned. If you’re not comfortable doing that, your best bet is to take the log file to a popular security forum like BleepingComputer or SpywareInfoForum and ask their armies of knowledgeable volunteer malware slayers to comb over it for you. Alternately, while not a replacement for receiving expert help from people in the forums, HijackThis.de is a web-based HijackThis log reader which is updated nightly. You upload your log file, it scans the file for relevant entries and gives you links to articles on how to remove the malware found in the log.

This week’s honorable mention goes to “Reformat” (as in your hard drive) as a last-ditch, foolproof solution to your malware problems. Apparently sometimes when you find a mouse in the kitchen the only way to be sure there aren’t any more of them in the walls is to burn the whole house down. Have a malware horror story, a favorite tool, or a prevention tip you want to share? Sound off in the comments below.

Nokia: We Don’t Know Why Criminals Want Our Old Phones

Finally, the truth about Area 51

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As for the guys who picked him up, they were tracked down and told to sign national security nondisclosures. As part of Collins’ own debriefing, the CIA asked the decorated pilot to take truth serum. “They wanted to see if there was anything I’d for-gotten about the events leading up to the crash.” The Sodium Pento-thal experience went without a hitch—except for the reaction of his wife, Jane.

“Late Sunday, three CIA agents brought me home. One drove my car; the other two carried me inside and laid me down on the couch. I was loopy from the drugs. They handed Jane the car keys and left without saying a word.” The only conclusion she could draw was that her husband had gone out and gotten drunk. “Boy, was she mad,” says Collins with a chuckle.

At the time of Collins’ accident, CIA pilots had been flying spy planes in and out of Area 51 for eight years, with the express mission of providing the intelligence to prevent nuclear war. Aerial reconnaissance was a major part of the CIA’s preemptive efforts, while the rest of America built bomb shelters and hoped for the best.

“It wasn’t always called Area 51,” says Lovick, the physicist who developed stealth technology. His boss, legendary aircraft designer Clarence L. “Kelly” Johnson, called the place Paradise Ranch to entice men to leave their families and “rough it” out in the Nevada desert in the name of science and the fight against the evil empire. “Test pilot Tony LeVier found the place by flying over it,” says Lovick. “It was a lake bed called Groom Lake, selected for testing because it was flat and far from anything. It was kept secret because the CIA tested U-2s there.”

When Frances Gary Powers was shot down over Sverdlovsk, Russia, in 1960, the U-2 program lost its cover. But the CIA already had Lovick and some 200 scientists, engineers and pilots working at Area 51 on the A-12 OXCART, which would outfox Soviet radar using height, stealth and speed.

Col. Slater was in the outfit of six pilots who flew OXCART missions during the Vietnam War. Over a Cuban meat and cheese sandwich at the Bahama Breeze restaurant off the Las Vegas Strip, he says, “I was recruited for the Area after working with the CIA’s classified Black Cat Squadron, which flew U-2 missions over denied territory in Mainland China. After that, I was told, ‘You should come out to Nevada and work on something interesting we’re doing out there.’ ”

Even though Slater considers himself a fighter pilot at heart—he flew 84 missions in World War II—the opportunity to work at Area 51 was impossible to pass up. “When I learned about this Mach-3 aircraft called OXCART, it was completely intriguing to me—this idea of flying three times the speed of sound! No one knew a thing about the program. I asked my wife, Barbara, if she wanted to move to Las Vegas, and she said yes. And I said, ‘You won’t see me but on the weekends,’ and she said, ‘That’s fine!’ ” At this recollection, Slater laughs heartily. Barbara, dining with us, laughs as well. The two, married for 63 years, are rarely apart today.

“We couldn’t have told you any of this a year ago,” Slater says. “Now we can’t tell it to you fast enough.” That is because in 2007, the CIA began declassifying the 50-year-old OXCART program. Today, there’s a scramble for eyewitnesses to fill in the information gaps. Only a few of the original players are left. Two more of them join me and the Slaters for lunch: Barnes, formerly an Area 51 special-projects engineer, with his wife, Doris; and Martin, one of those overseeing the OXCART’s specially mixed jet fuel (regular fuel explodes at extreme height, temperature and speed), with his wife, Mary. Because the men were sworn to secrecy for so many decades, their wives still get a kick out of hearing the secret tales.

Barnes was married at 17 (Doris was 16). To support his wife, he became an electronics wizard, buying broken television sets, fixing them up and reselling them for five times the original price. He went from living in bitter poverty on a Texas Panhandle ranch with no electricity to buying his new bride a dream home before he was old enough to vote. As a soldier in the Korean War, Barnes demonstrated an uncanny aptitude for radar and Nike missile systems, which made him a prime target for recruitment by the CIA—which indeed happened when he was 22. By 30, he was handling nuclear secrets.

“The agency located each guy at the top of a certain field and put us together for the programs at Area 51,” says Barnes. As a security precaution, he couldn’t reveal his birth name—he went by the moniker Thunder. Coworkers traveled in separate cars, helicopters and airplanes. Barnes and his group kept to themselves, even in the mess hall. “Our special-projects group was the most classified team since the Manhattan Project,” he says.

Harry Martin’s specialty was fuel. Handpicked by the CIA from the Air Force, he underwent rigorous psychological and physical tests to see if he was up for the job. When he passed, the CIA moved his family to Nevada. Because OXCART had to refuel frequently, the CIA kept supplies at secret facilities around the globe. Martin often traveled to these bases for quality-control checks. He tells of preparing for a top-secret mission from Area 51 to Thule, Greenland. “My wife took one look at me in these arctic boots and this big hooded coat, and she knew not to ask where I was going.”

So, what of those urban legends—the UFOs studied in secret, the underground tunnels connecting clandestine facilities? For decades, the men at Area 51 thought they’d take their secrets to the grave. At the height of the Cold War, they cultivated anonymity while pursuing some of the country’s most covert projects. Conspiracy theories were left to popular imagination. But in talking with Collins, Lovick, Slater, Barnes and Martin, it is clear that much of the folklore was spun from threads of fact.

As for the myths of reverse engineering of flying saucers, Barnes offers some insight: “We did reverse engineer a lot of foreign technology, including the Soviet MiG fighter jet out at the Area”—even though the MiG wasn’t shaped like a flying saucer. As for the underground-tunnel talk, that, too, was born of truth. Barnes worked on a nuclear-rocket program called Project NERVA, inside underground chambers at Jackass Flats, in Area 51’s backyard. “Three test-cell facilities were connected by railroad, but everything else was underground,” he says.

And the quintessential Area 51 conspiracy—that the Pentagon keeps captured alien spacecraft there, which they fly around in restricted airspace? Turns out that one’s pretty easy to debunk. The shape of OXCART was unprece-dented, with its wide, disk-like fuselage designed to carry vast quantities of fuel. Commercial pilots cruising over Nevada at dusk would look up and see the bottom of OXCART whiz by at 2,000-plus mph. The aircraft’s tita-nium body, moving as fast as a bullet, would reflect the sun’s rays in a way that could make anyone think, UFO.

In all, 2,850 OXCART test flights were flown out of Area 51 while Slater was in charge. “That’s a lot of UFO sightings!” Slater adds. Commercial pilots would report them to the FAA, and “when they’d land in California, they’d be met by FBI agents who’d make them sign nondisclosure forms.” But not everyone kept quiet, hence the birth of Area 51’s UFO lore. The sightings incited uproar in Nevada and the surrounding areas and forced the Air Force to open Project BLUE BOOK to log each claim.

Since only a few Air Force officials were cleared for OXCART (even though it was a joint CIA/USAF project), many UFO sightings raised internal military alarms. Some generals believed the Russians might be sending stealth craft over American skies to incite paranoia and create widespread panic of alien invasion. Today, BLUE BOOK findings are housed in 37 cubic feet of case files at the National Archives—74,000 pages of reports. A keyword search brings up no mention of the top-secret OXCART or Area 51.

Project BLUE BOOK was shut down in 1969—more than a year after OXCART was retired. But what continues at America’s most clandestine military facility could take another 40 years to disclose.

ANNIE JACOBSEN is an investigative reporter who sat for more than 500 interviews after she broke the story on terrorists probing commercial airliners. When she isn’t digging into intelligence issues for the likes of the National Review, she’s snapping together Legos with her two boys.

Humans and Aliens Might Share DNA Pattern

By Brandon Keim April 07, 2009 | 7:26:38 PM

Pudritz and Higgs tabulated the types and frequencies of amino acids found in primordial Earth experiments, then correlated the results on a graph of temperature versus atmospheric pressure at which the acids likely formed.

The 10 amino acids synthesized in primordial Earth experiments tended to arise at relatively low temperatures and pressures, and are chemically simple. Other, more complex acids formed less frequently, and require more temperature and pressure. Their distribution follows a clear, possibly thermodynamic, curve.

“The most frequent amino acid that forms is the one that’s least-demanding, energetically. There’s less and less amino acids that require more energy to form. That’s very sensible, from a thermodynamic point of view,” said Pudritz.

Internal conditions of meteorites are unknown, but some scientists believe that certain large meteorites are both warm and hydrated, making them roughly analogous to the relatively temperate environment of Earth’s youth.

“There’s a theory,” said Pudritz, “that they could be made in the warm interiors of large-enough meteorites.”

This is necessarily speculative, but it would explain why the 10 amino acids most common in primordial Earth experiments are also the most common acids found in meteorites.

Pudritz and Higgs speculate that these 10 common amino acids sufficed to generate the earliest replicating molecules, with other, rarer acids incorporated into the nascent genetic code as they formed or arrived — a process called “stepwise evolution,” culminating in the genes that gathered 3.6 billion years ago in a common ancestor of all complex life.

If simulations of interactions between these 10 acids indeed produce molecules that can copy themselves, said Pudritz, then it’s possible that they represent an ur-genetic code.

“There’s a possible universality,” he said, “for any code that would use amino acids.”

Harvard University systems biologist Irene Chen, who specializes in the evolution of molecules, called the work “interesting,” but noted that “in the absence of some experimental backup, it’s generally difficult to know if this kind of analysis is a Panglossian argument.”

The ultimate experimental backup, of course, is finding aliens. In the meantime, the ending of Battlestar Galactica seems a bit less implausible.

Citation: “A thermodynamic basis for prebiotic amino acid synthesis and the nature of the first genetic code.” By Paul G. Higgs, Ralph E. Pudritz. arXiv, April 6, 2009.

The European Extremely Large Telescope will be the first optical telescope capable of picking out the weak pinpricks of light that are reflected from planets as they orbit stars.

Astronomers claim the huge instrument, which will house a mirror the width of five double decker buses placed end to end, will be able to spot rocky Earth-like planets up to 100 million million miles away.

The telltale signatures in the light coming from such planets could also reveal whether there is water on their surfaces, which gases are in their atmospheres, and even if they may harbour life itself.

It will be the first time planets outside our own solar system have been seen using light from their surface. Current telescopes are not powerful enough to detect even giant planets in this way as the light they reflect is overwhelmed by far brighter stars.

The 1 billion euro (£700 million) E-ELT will have more mirror glass than all the other telescopes in the world put together.

It is expected to be so powerful that if astronomers were to use it to peer at the Moon, they would be able to see the car sized lunar rover that was left on the moon by astronauts during the Apollo missions.

With such high resolution, scientists believe they will be able to see Earth-like planets that orbit stars within a region known as the habitable zone, an area far enough away from the star around which it orbits to not be too hot to support life, but also not to far away and too cold.

As astronomers this year celebrate 400 years since Galileo first used a telescope with a lens just an inch wide to study the heavens, British scientists on Thursday presented the detailed scientific case for building the new giant telescope which will be four times larger than any other telescope yet built.

Isobel Hook, joint chair of the E-ELT science working group and an astronomer at Oxford University, said: “The astronomy community has been moving towards building progressively bigger telescopes to get sharper images.

“The resolution of the ELT is going to allow us to see objects and structures in the universe that we have been blind to until know.”

There are currently 344 known planets outside our own solar system which have been detected indirectly by looking for changes in light coming from stars as the planets pass in front of them. Almost all are gas giants similar to Jupiter.

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The E-ELT, which will gather more than 15 times more light than telescopes currently in operation, will be able to directly see small rocky planets as they orbit their stars.

By analysing the spectrum of the light reflected from these planets, it should also be possible to determine whether they have water or even vegetation on the surface.

Professor Andrew Cameron, an astronomer at University of St Andrews, said: “If they live up to the design goal, we will be able to detect Earth-like planets tens of light years away.

“There are lots of stars within that range, so there is real potential for finding a terrestrial planet that could sustain life.”

Construction of the E-ELT, which is being funded by the European Southern Observatory, an international research organisation made up of 14 European countries including Britain, is expected to start in 2010 and the telescope is due to be operational by 2018.

A decision on where the telescope will be located is to be taken at the end of this year. Candidates include La Palma in the Canary Islands and Chile.

The E-ELT will use 906 hexagonal segments – each four and a half feet across – that will be pieced together to work together as a single mirror housed inside a giant rotatable dome. Each segment will have to be continually adjusted by computers to produce a single image.

In the past, optical telescopes on Earth have also been hindered by turbulence in the atmosphere which can leave images of stars and galaxies slightly fuzzy.

This problem led to astronomers building expensive space telescopes like the Hubble Space Telescope which can operate outside of the Earth’s atmosphere.

Astronomers behind the E-ELT, however, plan to use new technology that could make future space telescopes unnecessary.

They propose to use powerful lasers positioned at several points around the giant mirror that will be fired more than 55 miles up through the atmosphere to create a faint “artificial star”.

This artificial star can then be used to measure the level of blurring that the atmosphere is causing and a special deformable mirror can be adjusted to compensate.

Scientists claim this will allow them to achieve some of the clearest images of our universe ever achieved from the surface of the planet.

Colin Cunningham, director of the E-ELT programme in the UK, said: “There will be more glass in this telescope than there is in all the other telescopes currently in use around the world put together.

“The detail it will allow us to see is four times greater than we can currently get. It is very exciting.”

April 3 (Bloomberg) — The U.S. unemployment rate jumped in March to the highest level since 1983 and service industries shrank at a faster pace, indicating the economy remains trapped in what’s likely to be the longest recession since the 1930s.

Federal Reserve Vice Chairman Donald Kohn said both the Obama administration and central bank must remain “flexible and open” to further measures because the economy and financial markets aren’t “out of the woods yet.” The labor-market rout will make it tougher for President Barack Obama to follow through on his pledge to save or create 3.5 million jobs.

The economy lost 663,000 jobs in March, bringing losses since the slump began to about 5.1 million, the worst in the postwar era, Labor Department figures showed in Washington. The 8.5 percent jobless rate was consistent with the forecasts of 79 economists surveyed by Bloomberg News. The Institute of Supply Management’s non-manufacturing index unexpectedly dropped.

“We could continue to see a few more months of really bad employment numbers before it starts to ease,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Behravesh projected the jobless rate will peak between 10 percent and 10.5 percent in early 2010. “We aren’t there yet, but we are getting closer to a bottom,” he said.

Treasuries, Stocks

Treasuries slumped after the jobs report was no worse than what economists had forecast, with benchmark 10-year note yields rising as 2.84 percent at 11:42 a.m. in New York, up from 2.77 percent late yesterday. The Standard & Poor’s 500 Stock Index fell 0.3 percent to 831.82.

Job cuts have been spreading from manufacturers such as Johnson Controls Inc. and Dana Holding Corp. to service providers like International Business Machines Corp. and even the U.S. Postal Service.

In addition to cutting jobs, companies also reduced hours for those still on payrolls. The average number of hours worked fell to 33.2 per week, down six minutes from February and the fewest since records began in 1964.

Revisions subtracted 86,000 workers from January payrolls while February’s drop of 651,000 was not revised.

The last time the unemployment rate was at 8.5 percent was in November 1983, when the economy was recovering from the 1981- 82 recession that pushed the rate to almost 11 percent. Then Fed Chairman Paul Volcker boosted interest rates to quell soaring inflation following the 1970s fuel crisis.

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Payroll Forecast

Payrolls were forecast to drop by 660,000, according to the median of 80 economists surveyed by Bloomberg News. Estimates ranged from losses of 525,000 to 750,000. Forecasts for the jobless rate ranged from 8.2 percent to 8.7 percent.

“The hope and expectation is that things will get a little less dire in the second quarter as various stimulus efforts kick in,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York, who used to work at the Fed.

Today’s report showed factory payrolls fell by 161,000 after declining 169,000 in the prior month. Economists forecast a drop of 160,000. The decrease included a loss of 17,500 jobs in auto manufacturing and parts industries.

The manufacturing slump that began more than a year ago may intensify should General Motors Corp. be forced into bankruptcy, economists said. As many as 1 million additional auto-industry jobs may be lost and unemployment would climb to 11 percent, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York.

Auto Slump

The auto slump has already rippled through the industry. Johnson Controls, a maker of car interiors and batteries, said last month it will shut 10 factories and cut about 4,000 jobs. Dana, the truck-axle manufacturer that exited bankruptcy in 2008, said it will boost its payroll reduction to 5,800 this year, 800 more than previously announced.

“We are taking the difficult actions necessary to survive,” Dana’s Chief Executive Officer John Devine said in a March 16 statement.

Service industries, which include banks, insurance companies, restaurants and retailers, cut 358,000 workers after a 366,000 decline in February. Financial firms cut payrolls by 43,000, after a 44,000 decrease the prior month. Retail payrolls decreased by 47,800 after a 50,800 drop.

The ISM’s services index, which covers almost 90 percent of the economy, fell to 40.8, the lowest level of the year, from 41.6 the prior month, according to the Tempe, Arizona-based group. Readings below 50 signal contraction.

The measure was projected to increase to 42, according to the median forecast in a Bloomberg News survey of 67 economists. Estimates ranged from 38 to 45.

Fewer Orders

The ISM index of new orders fell to 38.8 from 40.7 the prior month, and its gauge of employment dropped to 32.3 from 37.3.

For many Americans, this employment slump has been an unfamiliar experience. Sarah Opple, 42, was fired in February from a sales position at Gaylord Hotels in Chicago after holding a series of jobs in the hospitality industry since she was 17 years old. “It’s more real to me now,” she said in a March 26 interview. “This recession is way more tangible than the others. It makes everyone feel they could be next.”

Since taking office Jan. 20, Obama has enacted a series of measures aimed at stemming the recession. He signed into law a $787 billion stimulus plan on Feb. 17 that included spending on infrastructure projects to boost hiring.

The Treasury Department is also moving to repair the damaged financial system and lower record foreclosures, while the Fed is flooding markets with cash to boost borrowing and spending.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net