Chris Rupkey, senior economist at The Bank of Tokyo-Mitsubishi in New York, represented general market sentiment as he hailed the selection: “A fantastic choice to help lead the financial markets out of the wilderness,” Rupkey said. “A crisis manager par excellence who will hit the ground running as he has been on the case since the global funding crisis began way back in July 2007.”

We’ll have to wait and see whether having a key Fed official proves a smart choice to be in charge of the bailout, but at this point even Joe the Plumber seems like a better option than Goldman’s Hank Paulson, who now seems merely confused.

And speaking of Goldman Sachs, economists at the investment bank forecast that the U.S. unemployment rate will reach 9%, from 6.5% currently, by the end of 2009, and that the economy will shrink in each quarter until mid-2009.

If unemployment does go that high, it would be “unequivocally the worst single downturn on record since World War II,” Goldman’s analysts wrote.

Source: Dollar lower against euro - Goldman predicts 9% unemployment.

“We are in a recession, this report doesn’t change that,” Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, told Bloomberg News. Zentner had forecast a payrolls cut of 25,000. “What it does is support the idea that the downturn will be mild. Consumer spending isn’t going to tank.”

Compared to the 240,000 jobs the domestic labor market shed in the first three months of the year, 20,000 is a marked improvement. The continued slump in the housing market and waning consumer confidence affected sectors tied to the housing market and consumer goods.

“Employment continued to decline in construction, manufacturing, and retail trade, while jobs were added in health care and in professional and technical services,” the DOL statement read.

The report was universally better than expected, as many economists had expected a slight increase in the unemployment rate to 5.2%. Many saw the moderation in job losses as affirmation that the U.S. Federal Reserve should pause in its rate-cutting campaign.

“For now, this employment trend is validating signals sent by the [Federal Open Market Committee] earlier this week to take a pause in rate cuts,” wrote Stephen Gallagher, economist for Societe Generale SA (OTC: SCGLY), MarketWatch reported. The report “lessens the fears of a deep, or prolonged downturn in the economy.”

In an unrelated report, the Commerce Department announced that domestic factory orders increased 1.4% in March on the heels of a 0.9% decline in February due largely to strong international sales. The weak dollar is helping to boost exports and offset weakening demand at home.

“The cross currents of a weak domestic economy and a strong export sector continue to keep activity from faltering sharply,” Jonathan Basile, an economist at Credit Suisse Holdings Inc. (CS) in New York, told Bloomberg.

Again, the report was better than anticipated, as economists’ had expected an increase of only 0.2%.