Jobless claims jump to 7-year high, signaling rapid deterioration in the labor market
By CHRISTOPHER S. RUGABER - AP - Update: Nov. 13, 2008 - 8:14 AM
WASHINGTON - The number of newly laid-off individuals seeking unemployment benefits has jumped to a level not seen since just after the Sept. 11, 2001, terrorist attacks.
The Labor Department on Thursday reported that jobless claims last week increased by 32,000 to a seasonally adjusted 516,000. That nearly matched the 517,000 claims reported seven years ago, and is the second-highest total since 1992.
The total also was much higher than analysts expected. Wall Street economists surveyed by Thomson Reuters expected claims to increase only slightly to 484,000. Initial claims from two weeks ago were revised upward Thursday by 3,000 to 484,000.
The increase puts jobless claims at levels similar to the recession of the early 1990s. The four-week average of claims, which smooths out fluctuations, increased to 491,000, the highest in more than 17 years.
Thursday's figure is the first time claims have topped 500,000 during the current economic slowdown. Jobless claims above 400,000 are considered a sign of recession. A year ago, claims stood at 338,000.
The number of individuals continuing to seek unemployment benefits rose to 3.9 million, above analysts' estimates of 3.85 million. That's the highest total since January 1983, though the labor market has grown by about half since then. The continuing claims tally is for the week ending Nov. 1, one week behind the initial claims report.
Recipients stop receiving benefits when they find another job or their benefits run out. The increase in continuing claims indicates that laid-off workers are taking longer to find a new job.
With the US auto industry on the ropes, and uncertainty of what if anything the government might do about it, things could get worse. I have seen the claim one job in ten in the nation is related to the US auto industry, its supply chain, and its sales and repair opportunities. Presumably any major auto industry failure would have ripple effects on the small machine shops prevalent in the north metro area, where some presumably supply the auto industry parts market. Other machine shops that do not rely on the auto trade presumably would face increased competition in their niche markets if other shops lose major accounts.