Jobless claims remain elevated due to weakened US economy
Posted: Thursday, October 30, 2008 9:30 pm
By CHRIS RUGABER
AP Economics Writer
WASHINGTON (AP) _ New claims for unemployment benefits were unchanged last week, remaining at the same elevated level due to the struggling economy, the government said today.
The Labor Department said new claims for jobless benefits for the week ending Oct. 25 stood at a seasonally adjusted 479,000, the same as the previous week and above analysts’ estimates of 475,000.
The four-week average, which smooths out fluctuations, was 475,500, down 5,000 from the previous week’s total.
The number of people continuing to claim unemployment benefits also improved, falling 12,000 to 3.72 million.
Separately, the Commerce Department said today that the nation’s economy shrank by 0.3 percent in the third quarter, an indication the country may already be in recession.
Many economists expect the economy to continue to shrink in the fourth quarter and first quarter of next year, meeting one definition of a recession as at least two consecutive quarters of decline.
Consumer spending plummeted by 3.1 percent in the July to September quarter, the Commerce Department said, the sharpest drop in 28 years.
Jobless claims above 400,000 are considered a sign of a recessionary economy. A year ago, claims stood at 332,000, the department said.
Job losses can ripple throughout the economy by causing consumers to cut back on their spending, and can also make it harder for individuals to make their mortgage payments, fueling the ongoing housing crisis.
Four weeks ago, the impact of the economic slowdown as well as Hurricanes Ike and Gustav sent jobless claims to a seven-year high of 499,000. The department attributed about 45,000 of the claims at that time to the impact of the hurricanes.
Hurricane Ike added only about 7,500 claims in Texas last week, the Labor Department said, which means claims have remained high even as the impact of the hurricanes has faded.
Companies cut 760,000 jobs in the first nine months of this year, sending the unemployment rate to 6.1 percent in September. Many economists expect the rate to increase to 8 percent or higher by next year.
Several companies have announced mass layoffs recently, including Whirlpool Corp., financial services company National City Corp. and Xerox Corp.