WASHINGTON (Feb. 19) - The number of laid-off workers receiving
unemployment benefits has jumped to an all-time high near 5 million
while new jobless claims remain well above 600,000. Both figures
were worse than expected and new projections from the Federal
Reserve show unemployment rising for the rest of this year.
The Labor Department reported Thursday that the number of people
receiving regular unemployment benefits rose 170,000 to 4.99
million for the week ending Feb. 7, marking the fourth straight
week those receiving benefits have been at a record level on data
going back to 1967.
The continuing claims figure also was significantly above the
year-ago level of 2.77 million and underscored the difficulty
people are having in this recession finding another job once they
are laid off.
An additional 1.5 million people are receiving benefits under an
extended unemployment compensation program approved by Congress
last year, bringing the total number of people receiving
unemployment benefits to 6.54 million for the week ending Feb. 7.
In other economic news, wholesale inflation surged unexpectedly
in January, according to the Labor Department. Wholesale prices
jumped 0.8 percent last month, the biggest gain since July and well
above the 0.2 percent increase that economists expected.
The acceleration was led by a 3.7 percent surge in energy prices
with gasoline prices jumping 15 percent, the biggest gain in 14
months. Even outside the volatile food and energy sectors,
wholesale prices showed a bigger-than-expected increase, rising by
0.4 percent.
The New York-based Conference Board said its January index of
leading economic indicators rose 0.4 percent, the second straight
monthly gain. Economists expected no change in the index, which
forecasts economic activity for the next three to six months based
on 10 economic components, including stock prices, building permits
and initial claims for unemployment benefits.
The Conference Board said the single biggest boost to the index
was the real money supply. The government's effort to address the
credit crisis has put more money in circulation. Other positive
factors were the interest rate spread, an index of consumer
expectations, and manufacturing orders for non-defense and consumer
goods. Unemployment claims and building permits were among the
biggest drags.
On Wall Street, stocks were mixed in midmorning trading. The Dow
Jones industrial average fell nearly 20 points, while the Standard
& Poor's 500 index rose slightly and the Nasdaq composite index
dipped.
New applications for unemployment benefits totaled 627,000 last
week, the same as the previous week, according to the department.
But that was still more than the 620,000 claims economists
expected.
It also remained near the 631,000 claims filed three weeks ago,
which was the highest tally since October 1982, when the economy
was emerging from a steep recession, though the labor force has
grown by about half since then. A year ago, initial claims stood at
342,000.
The four-week average for claims rose to 619,000 last week, up
from 608,500 the previous week which was the first time the figure
had topped 600,000 during the economic downturn.
The cascade of layoff notices in recent weeks has heightened
concerns about the current recession, already the longest in a
quarter-century.
Goodyear Tire & Rubber Co., said Wednesday it will cut nearly
5,000 jobs, or almost 7 percent of the biggest U.S. tire maker's
work force, this year after it posted a fourth-quarter loss and
revenue sank 21 percent. The cuts follow the elimination of about
4,000 jobs in the second half of last year.
General Motors Corp. and Chrysler on Tuesday filed plans with
the government more than doubling their request for aid to a total
of $39 billion and announced plans for thousands more job cuts. GM
alone said it would cut 47,000 jobs globally by the end of the year
- 19 percent of its work force, and Chrysler said it will cut 3,000
more jobs.
The Fed released a new economic forecast on Wednesday that
reduced its growth forecast for 2009 and increased its unemployment
rate projections. The new forecast predicts that unemployment will
hit between 8.5 and 8.8 percent this year, up from the current
level of 7.6 percent.
And in an appearance at the National Press Club, Fed Chairman
Ben Bernanke said Wednesday that "strong and aggressive action"
would be able to overcome the current recession and jolt the
economy back into growth. But he said "if we fail ... then the
situation will continue to deteriorate."
President Barack Obama pointed to the deteriorating economy to
win quick passage of an $787 billion economic stimulus program
which he signed into law this week. On Wednesday, Obama unveiled a
$75 billion program aimed at halting the surging level of mortgage
foreclosures in the wake of the worst slump in housing in decades.
For the week ending Feb. 7, the states with the largest
increases in jobless applications were Kentucky and Arkansas, which
blamed the jumps on rising layoffs in the mining, trade and
manufacturing industries. The biggest decreases were recorded in
California and Tennessee, which reported fewer layoffs in the
construction, trade, service and manufacturing industries.
