Perilous Times
US jobless claims up by 500,000
By Julianne Pepitone, staff reporter
August 19, 2010: 11:08 AM ET
NEW YORK (CNNMoney.com) -- A government report Thursday brought bad
news for workers and the economy: The number of unemployed Americans
seeking a financial lifeline has reached its highest level in nine
months.
Last week, the number of first-time filers for unemployment insurance
rose for the third time in a row, to 500,000, according to a Labor
Department report released
There were 488,000 claims filed the previous week.
"This 500,000 level is very difficult, on both a psychological and
semi-technical level," said Tim Quinlan, an economist at Wells Fargo.
Initial claims had been hovering in the mid- to upper-400,000s since
November.
"You can sometimes dismiss a big number and say , 'Oh, it's just one
week,'" Quinlan added. "But with the four-week moving average
continuing higher, you can see this is just a bad trend."
The 4-week moving average of initial claims -- a number that tries to
smooth out week-to-week volatility -- was 482,500, up 8,000 from the
previous week. (Read 'Tired of living paycheck to paycheck')
Can the economy recover without jobs? During the last downturn around
2001, Quinlan notes, companies' finances were in bad shape -- but
consumers were weathering it well.
Don't blame the consumer
"In this recession, we have the opposite," Quinlan said. "Companies are
flush with cash, but economic data on the consumer side have been so
weak."
But all that cash on corporate balance sheets means nothing to
consumers unless companies start hiring, Quinlan said.
"Everyone's in this mode of wait and see for a sustainable recovery,"
Quinlan said. "But that concern will be a self-fulfilling prophecy if
we don't create jobs."
0:00 /4:00Surviving a long-term job search
Continuing claims: The government also said 4.48 million people filed
continuing claims in the week ended Aug. 7, the most recent data
available. That's down 13,000 from the preceding week.
Continuing claims reflect people who file each week after their initial
claim until the end of their standard benefits, which usually last 26
weeks. The figures do not include those who have moved to state or
federal extensions, nor people who have exhausted their benefits but
are still out of a job.
The 4-week moving average for ongoing claims fell by 1,500 to 4.53
million.