Unemployment Claims Jump Unexpectedly To 16-Year High

Bloomberg is reporting U.S. Initial Jobless Claims Rose to 542,000 Last Week.

First-time claims for U.S. unemployment insurance unexpectedly rose last week to the highest level since 1992, a sign the labor market is deteriorating as the economic slump deepens.

Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982.

Job losses in the U.S. have totaled 1.2 million this year as the economy entered a downturn exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending, putting pressure on President- elect Barack Obama and Congress to agree on legislation that will stimulate growth.

The four-week moving average of initial claims, a less volatile measure, increased to 506,500 last week from 490,750 a week earlier. So far this year, weekly claims have averaged 404,000, compared with an average of 321,000 for all of 2007, when the economy added a total of 1.1 million jobs.

Citigroup Inc., the fourth-largest U.S. bank, will eliminate 52,000 jobs over the next year, twice the target announced last month, as loan losses surge and the economy shrinks, the company said Nov. 17.

Carmakers are also shedding workers. Ford Motor Co. plans temporary shutdowns at nine North American plants this quarter, idling as many as 23,000 workers, as it slashes production after an 18 percent drop in U.S. sales this year, the company said Nov. 12.

Layoffs Not Yet Factored Into Unemployment Rate

Announced job cuts have been piling up so fast I do not understand how anyone could be surprised by the number of claims.

Those layoffs at Citigroup (C) and Ford (F) are not yet factored into the unemployment rate. Nor are job cuts at Goldman (GS), JP Morgan (JPM), GE (GE), and scores of other financial institutions. Nor are the huge jobs cuts at retailers that are coming early next year after what is going to be the worst Christmas shopping season ever.

The retailer layoffs have not been announced yet, but it is easy to predict they are coming. When the layoffs are announced and the jobless claims rise yet again, the safe prediction is that economists will once again be surprised by the announcements.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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