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February could be worst month yet for jobless claims
WASHINGTON -- The number of laid-off workers receiving unemployment benefits hit an all-time high of nearly 5 million this month, and new jobless claims are at levels not seen since the early 1980s.
The Labor Department reported Thursday that the number of people receiving regular unemployment benefits rose by 170,000 to 4.99 million for the week ending Feb. 7, marking the fourth straight week continuing claims have hit a record.
The surge in joblessness has pushed those claims far above the 2.77 million people getting benefits a year ago. The number totals 6.54 million with the inclusion of an additional 1.5 million people who are getting extended benefits under a program passed by Congress last summer.
And those numbers are sure to climb higher, based on the flood of newly laid-off workers seeking benefits.
The government reported Thursday that new jobless claims for last week totaled 627,000, the same level as the previous week but higher than economists expected. It also was near the recent high of 631,000 hit three weeks ago, which was the most new weekly claims since 1982 when the country was in another severe recession. The three straight weeks of seasonally adjusted claims above 600,000 also is the longest stretch in more than 26 years.
"The labor market is in disarray," said Mark Zandi, chief economist at Moody's Economy.com. "We are seeing job losses across nearly every industry and every region of the country."
Based on current trends, net job losses for February could well top 700,000, Zandi said. That would surpass the 598,000 jobs lost in January, which had been the biggest total since 1974.
Worries about the economy dragged the Dow Jones industrial average down nearly 90 points Thursday to close at 7,465.95, its lowest level in more than six years. The Standard & Poor's 500 index and the technology-heavy Nasdaq composite index also fell.
Even with approval of a $787 billion economic stimulus package this week, economists are warning that any recovery may not take hold until late this year at the earliest, given that the housing market is still deteriorating, the financial market has yet to stabilize and job losses are mounting.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech Thursday that the economy faces obstacles for the next several quarters that would work against a strong recovery.
"Those obstacles include credit markets not yet returned to healthy functioning, a housing market still weighed down by an excess supply of homes for sale and low business and household confidence," Lockhart said. "None of these is likely to turn around quickly."
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. Gasoline prices jumped 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 0.4 percent.
Meanwhile, the New York-based Conference Board said its January index of leading economic indicators rose 0.4 percent, the second straight monthly gain.
However, economists dismissed the gains in both wholesale prices and economic indicators as temporary blips that did not signal either a problem with inflation or a potential rebound in the economy.
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, but banks still have not returned to normal loan operations.
The inflation jump reflected a big rise in energy costs that analysts said was unlikely to last given slack demand from a spreading global recession.
The recession at home continues to pummel workers searching for jobs. The four-week average for unemployment benefits applications rose to 619,000, up from 608,500 the previous week. The prior week's total had been the first time the figure topped 600,000 during the current economic downturn, which began in December 2007 and is the longest slump in a quarter-century.
The cascade of layoff notices in recent weeks has shown that many employers are starting to trim payrolls drastically, abandoning hopes they could retain workers until a rebound took hold.
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.
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.