Unemployment Claims Top 6 Million
- The Bonez
The number of people getting unemployment benefits has topped six million for the first time ever. This, along with the unexpected fall of new home construction starts to its second lowest level ever, came in a government report released Thursday and indicates that the country's current recession is not nearing an end. Experts predict that the unemployment rate will remain high through most of the year because companies will be hesitant to create new jobs until the economy is well on its way to recovering. Also, the latest data from the real estate market indicates that it has not yet reached the bottom.
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However, some economists do see some hope. For two weeks in a row now the number of new unemployment claims has dropped more than expected, and the construction of new single-family homes seems to be stabilizing. In a report on Thursday, the Labor Dept. announced a seasonally adjusted rate of initial unemployment claims was 45,000 lower than expected and is at its lowest level since late January. One official said that there's usually a string of layoffs in the Spring and it didn't happen this year and that contributed to the drop in new claims. This make a clear assessment of the labor market difficult because the numbers are somewhat distorted. Experts do expect unemployment claims to rise in the near future, though not as rapidly as in the first quarter. Initial unemployment claims are a principal indicator of the state of the economy. Though they are falling, they remain far higher than at this time last year. The number of people remaining on
the unemployment benefit list is up substantially as well, showing how difficult it can be for the unemployed to find new jobs.
In the mean time, the Commerce Dept. announced that construction starts of new homes dropped almost 11% last month to the 2nd lowest pace on record since 1967, when such records began. The drop was bigger than most experts expected. Applications for building permits also fell, and this is considered an indicator for future housing starts. The single-family home sector, however, actually stabilized; with the same number of new homes built in March as in the previous month. Experts say that if the number stays stable another month it could mean the bottom is near, at least for the single-family home sector.
Stock prices closed with modest gains after fluctuating through much of the morning. The Dow Jones gained about 7 points and other indexes posted gains as well. The Labor Dept. reported more than 2 million people were using an extended unemployment program instituted by Congress last year. The program extends benefits by 20 to 33 weeks over the 26 weeks typically offered by states. Employers have eliminated more than 5 million jobs since December 2007 when the recession began. Companies cut over 660,000 jobs in March, raising the unemployment rate to 8.4%, higher than any other time in the last 25 years. Many experts have predicted the unemployment rate to hit 10% by year's end.
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