Nov. 23--The state's economy took another dive this week when the Department of Labor reported that 3,600 jobs disappeared off the books in October; estimates of the growing state deficit ballooned; and stocks in that Hartford stalwart, the insurance business, joined the plunge on Wall Street.

If you were thinking about heading outside for a cigarette to calm your nerves, be forewarned: the squeeze is on to snuff out even outdoor butt breaks.

On the brighter side, Louis Vuitton is bullish on the local market and, hey, at least Joe Lieberman got to keep his committee chairmanship.

Red And Bleak Red ink spilled all over the Capitol this week when the nonpartisan Office of Fiscal Analysis confirmed Gov. M. Jodi Rell's projection that the state could be $6 billion in the hole by the end of June 2011.

The free fall in Wall Street stock prices and the shrinking economy are to blame: The state won't be able to collect as much in taxes on everything from capital gains and corporate profits to cigarette sales.

Among the losers on Wall Street were insurance companies, whose stocks took further hits this week as the Dow Jones industrial average sank below 8,000 points.

Home sales dropped by 26 percent in the state during the first eight months of the year, and home prices dropped by 7.7 percent in the same period, so revenues from taxes on real estate sales will fall, too.

The fiscal office said the current fiscal year's deficit will be $391 million, more than three times what Rell had estimated last week. Rell said she will come up with a plan to deal with the deficit by February, and that everything -- including layoffs -- is on the table.

The legislature meets Monday in a special session to vote on Rell's proposals to cut spending and offer a tax amnesty in hopes it will encourage tax delinquents to pony up their share.

Public agencies are bracing for probable cuts in programs and staff. Schools from the university level down to the local level are likely to feel the pinch.

One administrator, Bristol School Superintendent Philip Streifer, asked the state to suspend standardized testing, shorten the school year and approve teacher furloughs to try to keep cuts from going too deeply into educational programs.

Meanwhile, unemployment here caught up with the rest of the nation, reaching 6.5 percent. Job losses for the year now total 7,700, and they have been hitting all sectors.

The state could see 40,000 to 80,000 jobs eliminated by the end of 2010, economists say.