The number of Americans filing new claims for jobless benefits rocketed to a
26-year high last week, surpassing already gloomy forecasts, as the U.S. economy
sinks deeper into recession.
Initial applications for jobless benefits climbed by 58,000 to 573,000 in the
week ended Dec. 6, upwardly revised from 515,000 the previous week, the U.S.
Labor Department reported yesterday (Thursday). The figure was
the highest since 1982, and far exceeded the median projection of
525,000 put forth by 39 economists surveyed by Bloomberg
News.
The increase was due, in part, to a bounce from the week before, which was
shorter because it included the Thanksgiving holiday. Government offices were
open only four days that week.
Nevertheless, the four-week average, which smooths out fluctuations, stood at
540,500. That’s the biggest number of jobless claims filed since December 1982,
when the economy was also mired in a deep recession. By comparison, there were
337,000 initial claims last year.
Workers claiming continuing jobless benefits also blew through economists’
projections, jumping by 338,000 to 4.4 million, the Labor Department said.
Economists had expected 4.1 million. Continuing claims lag initial claims by one
week.
"Stepping back from the short-term noise … it is very clear that the
underlying trend in claims is still rocketing, as companies throw in the towel
and
prepare for a long, deep recession," Ian Shepherdson, chief U.S.
economist for High Frequency Economics, wrote in a research note to clients,
MSNBC News reported.
Jobless claims are considered by economists to be a snapshot of the health of
the labor markets and broader economy.
The U.S. economy has shed 1.9 million jobs so far this year, with payrolls
having now dropped for 11 straight months. U.S. companies slashed 533,000 jobs
in November, and the unemployment rate grew to 6.7% , the highest since 1974,
the government said last week.
“The labor market is facing its worst crisis since 1982, and it is certainly
not over yet,” said Harm Banholtz, a U.S. economist at UniCredit Markets and
Investment Banking in New York, told Bloomberg News.
“One of the most important tasks of the newly elected government is, therefore,
to help distressed homeowners and to stimulate the labor market.”
More companies added to the malaise yesterday as additional layoffs were
announced. New Britain, Conn.-based toolmaker Stanley Works (SWK)
plans to lay off 2,000 workers and close three manufacturing plants.
Illinois-based foodmaker Sara Lee Corp.
