Challenger, Gray and Christmas, an international outplacement firm based in Chicago, announced this morning that planned job cuts zoomed 85 percent in August to 79,459, after falling to a 12-month low of 42,897 in July. This is the second-highest total of the year, according to the press release that hit my desk about 45 minutes ago.

Nearly half of the August cuts came from the financial sector, where job cuts reached a record high as dozens of mortgage and subprime mortgage lenders fell victim to the sinking housing market.

Overall, the financial sector has announced 102,758 job cuts this year and according to CGC, is on pace to surpass the previous annual record of 116,515 set in 2001, during the most recent recession.

“The story in August revolves around the dramatic collapse of the mortgage and subprime lending markets. There were early warning signs in April as a few major subprime lenders went under and released workers. However, what had been a relatively small number of job cuts suddenly turned into a deluge in August as financial institutions literally shut down operations overnight,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“We have not seen such a rapid descent since the airlines shed thousands of workers in the wake of September 11. It is too soon to tell if this is going to be a quick burst of job cutting like the post-9/11 airline cuts or if it will mimic the collapse that played out over several months in 2000 and 2001,” said Challenger.

“Unfortunately, these cuts are likely to be just the beginning. As of July, the Bureau of Labor Statistics counted more than 2.9 million people working in credit intermediation and related activities. Furthermore, the troubles in the housing sector have a significant potential to reverberate beyond the financial sector to other areas of the economy. Construction and real estate are the most obvious industries at risk, but we are already seeing housing-related cuts in home retail, building materials manufacturers and textiles,” said Challenger.

Sept. 5, 2007.