U.S. jobless ranks exceed 5 million
WASHINGTON — As bad as it is already, the economy keeps getting worse — and government figures Thursday provided more evidence that the downward spiral won't end anytime soon.
The number of Americans seeking unemployment benefits topped 5 million for the first time since record-keeping began in 1967. And the number of first-time claims hit 667,000, the highest level in more than a quarter-century. Both figures were worse than experts expected.
Orders for cars, computers, machinery and other durable goods plunged a larger-than-expected 5.2 percent in January as global economic troubles reduced demand from customers at home and abroad.
"We have been looking for signs that the economy's rate of decline might be slowing, but can't find any," said Nigel Gault, chief U.S. economist at the IHS Global Insight consulting firm.
The government reports offered more evidence that consumers are scaling back purchases as jobs vanish, home prices drop and stock portfolios shrink. Those factors fuel more job and spending cuts by profit-starved businesses.
"The hope is that policy efforts by the federal government will be able to break that cycle," said Zach Pandl, an economist at Nomura Securities International. "But it's still going to take some time before that happens."
President Barack Obama's $787 billion stimulus package, for example, includes billions of dollars of infrastructure spending, but most of the impact will not be felt until 2010 or later, Pandl said.
Initial jobless claims jumped to 667,000 last week, the Labor Department said, from the previous week's figure of 631,000. Analysts had expected a slight drop. Claims are now at the highest level since October 1982, though the work force has grown by about half since.
A third report Thursday showed that new home sales tumbled 10.2 percent to a seasonally adjusted annual rate of 309,000 last month, the worst showing on government records going back to 1963.
The median sales price fell to $201,100 in January, a record 9.9 percent drop from the previous month. The median price is the midpoint, where half of homes sell for more and half for less. But even lower prices and low mortgage rates have not eased the housing slump.
The labor market has deteriorated rapidly in recent months. Employers cut a net total of nearly 600,000 jobs in January, the highest monthly tally since 1974, pushing up the unemployment rate to 7.6 percent.
Given the jump in unemployment claims last week, JPMorgan economists expect payrolls will fall by at least 650,000 and unemployment will reach 8 percent in February and 10 percent by the end of this year.
The record number of continuing jobless claims shows many newly laid-off workers are having difficulty finding jobs. An additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year, as of Feb. 7, the latest data available. That brings the total number of jobless benefit recipients to roughly 6.5 million.
Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy. A year ago, initial claims stood at about 359,000.