The number of first-time claims filed by US citizens for jobless benefits rose by 32,000 last week, following the hurricanes in Texas and Louisiana.

Figures from the Labor Department show that new unemployment benefit claims reached their highest level since the World Trade Center attacks in September 2001 at 493,000.

The government said hurricanes Ike and Gustav had been responsible for a large proportion of the increase as residents were forced out of work.

Steven Wood, president of Insight Economics in California, told the International Herald Tribune: "The labor market is clearly in recession."

There are now 3.542 million citizens in receipt of jobless benefit in the US, the Labor Department confirmed.

Meanwhile, a daily poll by Gallup Management Journal has revealed a slump in consumer confidence following the collapse of Lehman Brothers, the sale of Merrill Lynch and the takeover of AIG.

Many citizens are also facing mounting debt problems and fears of unemployment.

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