WASHINGTON (MarketWatch) -- First-time filings for state unemployment benefits hit their highest level since September 2001, rising to 516,000 in the latest week, a further sign of how the U.S. labor market's struggling, the Labor Department reported Thursday.
For the week ended Nov. 8, initial claims climbed by 32,000 from last week's revised figure of 484,000.
The four-week average of new claims -- which measures the underlying trend in joblessness -- also hit a historic high, shooting up to 491,000. That's the highest since March 1991.Graph showing initial jobless claims rising to a high of 516,000. From MSNBC News.
There was more gloomy news in continuing claims, which rose to 3.89 million in the week ended Nov. 1, up 65,000.
The level of continuing claims indicates how difficult it is for displaced workers to find new jobs. Initial claims represent job destruction.
The four-week average of continuing claims was 3.79 million.
Both the figures for continuing claims and four-week continuing claims stood at the highest since 1983.
Unemployment benefits typically run out after 26 weeks for those who are eligible. A new law extends jobless benefits for an additional 13 weeks under a separate federal program.
Thursday's claims data are the latest gloomy indicator for the labor market.
In October, the nation's unemployment rate tipped 6.5% -- the highest in more than 14 years.
Some economists are expecting the picture to worsen further, perhaps considerably.
Let us go back to my previous post on retailers feeling the pinch of sales returns. Retailers were expecting consumers to return around 8.7 percent of total sales, or $219 billion worth of merchandise. That is up from 7.3 percent in 2007. The more that consumers feel threatened by job losses, or have lost their job, the less that they will spend on Christmas shopping. Even more, whatever merchandise that consumers have spent for Christmas, they may end up returning to retailers if these consumers have lost their jobs during the holiday season, or may need cash to pay bills.
Another interesting point is look at the graph--the jobless claims have really shot up since July of this year. The jobless claims have been hovering between 300,000 to 400,000 from November 2007 to June 2008, but then made a huge jump to around 450,000 in July and have continued to increase. Jobless claims reached 500,000 in September of this year--right around the time of the financial crisis. And now the claims are up to 516,000 for November. Something happened in July to cause employers to cut so many jobs between July and August. According to this August 18, 2008 MSNBC story on jobless claims, President Bush signed a bill in June to extend unemployment benefits by as long as 13 weeks. So jobless claims may have surged in July, as a greater number of Americans took advantage of the unemployment benefits. Some economists were expecting this to be a temporary measure, and that unemployment would drop back down after the temporary benefits were exhausted. But then we have inflation surging in August to around 5.6 percent, the Consumer Price Index jumping by 0.8 percent in July, and median home prices dropping by 7.6 percent during the second quarter. Inflation surged due to increases in energy and food prices, with energy prices increasing by 4 percent on a monthly basis and 29.3 percent annually, and food prices increasing by 0.9 percent monthly, and 8.4 percent annually. Median home prices dropped during the second quarter due to reduced demand in housing, and an increase in bank foreclosures due to the continuing subprime mortgage mess. Banks couldn't sell their foreclosed homes for the value of the subprime mortgage loans they took out on the homes. The bottom fell out of the U.S. economy between July and August, and then the Wall Street financial crisis slammed the U.S. economy in September / October. U.S. industrial output plunged in September by 2.8 percent. We are now seeing the effects of this U.S. economy dropping off a cliff. It is ugly.
No comments:
Post a Comment