Jobless Claims Drop, But Still Dangerously High

WASHINGTON — New applications for unemployment benefits dropped last week from a seven-year high, the Labor Department said Thursday, though they remain at elevated levels that indicate recession.

Initial claims for jobless benefits dropped 20,000 to a seasonally adjusted 478,000, the department said, the same level that Wall Street economists expected.

The department said Hurricanes Ike and Gustav were responsible for adding about 20,000 claims on a seasonally adjusted basis. That's down from approximately 45,000 the previous week.

The four-week average, which smooths out fluctuations, rose to 482,500, the highest since October 2001. The number of Americans continuing to claim unemployment benefits rose to 3.66 million, above analysts' estimates of 3.6 million. That's the highest total in more than five years.

Meanwhile, the financial markets are expected to rise in early trading in response to comments by Treasury Secretary Henry Paulson and other administration officials indicating the government is considering taking ownership stakes in troubled U.S. banks.

The move would be intended to unclog the credit markets that have made all kinds of loans, from interbank lending to consumer loans, harder to get.

Some economists have argued for such a step as a way to more directly provide capital to ailing banks, as opposed to the administration's initial bailout plan of buying bad mortgage-related assets from the banks.

The housing slump and resulting credit crisis has hit the economy hard, causing consumers to cut spending and businesses to eliminate jobs.

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In response to what has become a global credit crisis, the Federal Reserve and six other central banks on Wednesday announced a coordinated interest rate cut. The Fed reduced its target interest rate to 1.5 percent from 2 percent.

The Fed's cut means borrowing money becomes cheaper. Home equity loans, credit cards and other floating-rate loans all fluctuate depending on what the Fed does.

Jobless claims have come in above 400,000, a level economists consider a sign of recession, for 12 straight weeks. Claims stood at 316,000 a year ago.

The International Monetary Fund on Wednesday joined a chorus of private economists and predicted the U.S. economy will contract in the final quarter of this year and the first quarter of 2009, meeting one classic definition of a recession.

Many economists expect that consumer spending, which accounts for two-thirds of economic activity, will decline in the July-September quarter. That would be the first quarterly decline in 17 years.

Federal Reserve chairman Ben Bernanke said on Tuesday that economic activity will likely remain "subdued" for the rest of this year and into next year.

The Labor Department said in a separate report last week that the economy lost 159,000 jobs in September, the fastest pace of job cuts in five years. Employers have eliminated 760,000 jobs so far this year.

The unemployment rate remained at 6.1 percent in September, up from 5.7 percent in July and 4.7 percent a year ago.

Several companies announced job cuts in the past week, including eBay Inc., Kraft Foods Inc. and MetLife Inc.

Comments

[gemcando06]

My friend is an art teacher whose job has been reduced to an hourly rate with only 10 to 12 hours a week. She cannot be hired to a full time job because of budget shortfalls. Not only that, she must travel 70 miles one way. There is no public transport so she has to outlay gas money.

This allows her to receive a pay check, with no benefits, that can't cover her expenses. So she has to work nights as a cashier.

[schatsie]

Whoever thought that Bush after not getting Bin Laden and letting his family fly out after 9/11 and attacking Iraq instead of Saudi Arabia where 15 of the hijackers were from, and letting Katrina happen, and pushing the Federal Reserve for the Real Estate Bubble and continuing the repug deregulations and letting Kenny Lay escape and criminalizing third trimester abortions and cutting off Birth Control to developing countries and giving the rich a great big chunk of change, one TRILLION in tax cuts,,,,,,

Would end his ignominious reign with SHOCK and AWE on the American WORKING CLASS....If he wants to bail out his buddies, the first thing he should do is get back the trillion dollars he already gave them!!!!

[schatsie]

These unemployment numbers are only going to get worse... We need a Working Class BAILOUT to cut this depression off....(everyone knows that the repugs have fixed the numbers and we are now progressing from a recession into a depression)

4 point plan
1. Infrastructure jobs NOW... fix the damn bridges, roads and levees so that another Katrina costing billions of dollars is avoided.
2. Extend Unemployment benefits for the economic restructuring that is on the way, so that people have at least a basic income.
3. Cap INTEREST rates at no more than 5% over the COLA.. If the US government is essentially guaranteeing these, then there is no rist to the maker of the loan, so why allow the excessive profit? and guarantee only the PRINCIPAL and not the principal and outstanding interest...
4. Green Job development, increase the deductibility or greening up residences and buildings... this might be hard to audit, to determine if the greening is not just upgrading the building...Damn it I dont have granite counter tops and I don't want to pay for any for other people.

[Jennifer Kushell - Huffpost Blogger]

Gallup just released a new poll saying that 82% of Americans say that now is a bad time to find a job.

http://www.gallup.com/poll/111022/RecordHigh-82-Say-Now-Bad-Time-Find-Job.aspx

I don't like to talk about problems without offering solutions though (whenever possible), so here are a few I came up with today for the Examiner, in case these are helpful to anyone too:

http://www.examiner.com/x-828-Entry-Level-Careers-Examiner~y2008m10d10-Gallup-Now-is-a-Bad-Time-to-Find-a-Job

[Jennifer Kushell - Huffpost Blogger]

For anyone directly affected by these job losses, hope this can help a bit with the shock and next steps:

10 Tips for the Suddenly Unemployed
http://www.huffingtonpost.com/jennifer-kushell/tips-for-the-suddenly-une_b_128574.html

[patmos68]

The number of new claims dropped because everyone that was filling for the extension of UC benefits has already done so. Now those people are starting to run out of their 13 week extension, and there still are no jobs. Nor does it look like there will be anytime in the near future.

[Morgoth]

The jobless rates are going to get a lot higher before it's all over. Too bad the fools who caused all of this won't be the ones loosing their jobs, or anything for that matter.

[Graywolf48]

Well, apparently the Bush administration knows what the problem is, people are just too lazy to find a job. At a White House press briefing today, Dana Perino told reporters the President would oppose any extension of unemployment benefits and the best way to deal with unemployment is for the unemployed to go out and find a job. Compassionate conservatism at work. Too bad they aren't as willing to tell the bankers and brokers to get out and bail their own butts out of trouble.

[DMcD]

I wonder what the "real" unemployment numbers are ? Counting the self-employed with no work, the unemployed with expired benefits and the large numbers of people (engineers etc.) now working part-time or well below their status (as dishwashers etc.).

[earlofi]

republitards most filibusters in history of senate past two years , they only feel bad for the billionaires

[frieda44]

dangerously high!!!

it's 6.1% ...lowest than most industrial nations and only .2% higher than Clinton years..

so why are you hyping this up? what's init for you.

[DMcD]

........ if anything, its being played down ! The "true" numbers would be "much" higher if there wasn't so much "creative" accounting going on. Example (one of many); the construction industry (the largest single employment sector in America) is almost completely shut-down yet, these highly suspect "official" unemployment numbers showed this as a mere blip on the radar --- conclusion: as usual, we are being lied to.

[earlofi]

are there any jobs left to lose

[saus]

I'm old enough to remember our beloved Ronald Reagan holding a newspaper showing the classifieds, up to a television camera and saying something like, "See there's plenty of jobs." Most of the jobs were fast food jobs, insurance sales, and cemetery lots sales. I was out of work for a year. Now, I'm out of work and all the fast food jobs are taken and if it keeps going this direction I will be planted in a cemetery plot designed by the Republicans.

[StarkRavingNakedEmperor]

Once again--every photo on the front page of the HuffPo is of white people---except the photo of the unemployed guy looking in the paper for a job. It happens every single time!

[ExpatNL]

The USA govt are the biggest bunch of LIARS on the face of the earth.