Associated PressWASHINGTON – 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.
"The labor market is in disarray," said Mark Zandi, chief economist at Moody's Economy.com. It's possible that job losses for all of February could total between 700,000 and 750,000 based on what weekly claims have done so far this month, he added.
Employers slashed a net total of 598,000 jobs in January, the most since 1974.
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 fell in afternoon trading. The Dow Jones industrial average lost more than 30 points, and broader indicators also slid.
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.
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 56 mins ago
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.
"The economy faces obstacles that are likely to work against a strong rebound of growth over the next several quarters," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta and a voting member of the Fed's policymaking arm, said Thursday.
"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," he said in a speech in Alabama. "None of these is likely to turn around quickly."
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.
