Those of us out here already know how bad it is. When are the economists going to catch up with reality?

Oct. 2 (Bloomberg) -- The U.S. economic slump earlier this year was so severe it short-circuited the government’s model for calculating payrolls, raising the risk that today’s jobs report may be too optimistic.

About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991.

The bulk of the miss occurred in the calculations for the first quarter of this year, the Labor Department said. The economy shrank at a 6.4 percent annual pace in the first three months of 2009, the worst performance since 1982.

The figures raise the possibility that the government’s calculations continue to miss the mark.

“We are probably still underestimating job losses,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There could be another 30,000 to 40,000” that the data isn’t picking up, he said.

That would mean the loss of jobs for September could turn out to be as high as 300,000, rather than the 263,000 reported today by the Labor Department. Today’s report also showed the jobless rate climbed to 9.8 percent last month, a 26-year high.

The potential revision for the year through last March would mean that the economy lost 5.6 million jobs for the period instead of the 4.8 million now on the books.

From the White House blog:

The President explains his plan to address one of the major causes of the current economic crisis -- the breakdown of oversight leading to widespread abuses in the financial world. The new Consumer Financial Protection Agency will have the sole job of looking out for the financial interests of ordinary Americans by banning unfair practices and enforcing the rules. This is a cornerstone in America’s new economic foundation.

Transcript below the fold.

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Sure looks like Krugman was right when he said the stimulus package was too small. And the diddling around with the banking bailout isn't helping, either:

The nation is losing jobs so quickly that the government, racing to deal with the crisis, is having trouble keeping up.

The U.S. unemployment rate last month leapt half a percentage point, to 8.1 percent, the highest level since 1983, according to data released yesterday. The stunning pace of job losses raises the possibility that, perhaps as early as this summer, one in 10 Americans will be out of a job even though they are actively looking for work. It also means that the government faces even more pressure to take further action to stabilize the economy and the financial system.

President Obama, speaking in Columbus, Ohio, to police cadets whose jobs were saved with money from the $787 billion stimulus package, called the new unemployment figures "astounding."

"We have a responsibility to act," he said, "and that's what I intend to do."

Analysts increasingly view the administration's actions so far as insufficient given the scope of the problem. The stimulus package was designed to "save or create" 3.5 million jobs, according to the administration. But the nation has already lost 4.4 million jobs since the start of the recession. Many banks and other financial institutions, whose health is critical to the economy, are teetering, and the Treasury Department has yet to finalize the details of its plans to remove from their balance sheets the toxic assets dragging them down.

"It's premature to say we need another stimulus, but the economy is performing much worse than when [the law] was signed, and the odds are increasing that we'll need a bigger policy response," said Mark Zandi of Moody's Economy.com, who has advised Democratic lawmakers. "What we've learned is policy has been a step behind this whole downturn. It's important to get a step ahead."

The International Monetary Fund yesterday urged governments worldwide to consider additional fiscal stimulus, noting that the public sector must help prevent a collapse of confidence.