Lines Grow At U.S. Unemployment Offices

Weekly jobless claims have hit a sixteen-year high.

The number of Americans who applied for unemployment benefits for the first time hit a 16-year high last week, pushing the rolling herd of jobless citizens receiving this type of government aid to its highest level in 26 years.

The Labor Department reported Thursday that initial jobless claims for the the week ended Nov. 15 increased by 27,000, to 542,000, from the previous week's revised figure of 515,000. The four-week moving average was 506,500, an increase of 15,750 from the previous week's revised average of 490,750.

After the Dow closed to its lowest level since March 2003 on Wednesday, news of more weakness in the U.S. labor market had investors turning to safe-haven government debt for safety. The yield on the 10-year U.S. Treasury issue fell to 3.26% from 3.39% late on Wednesday.

This weekly figure tends to be quite volatile, but it is still another in many recent signs that the larger economy is now being hurt by the global financial crisis, which was triggered by the U.S. subprime mortgage mess. “It’s a much worse number than expected and it’s another sign that the market is deteriorating much faster than we’d anticipated,” said David Wyss, an economist with Standard & Poor’s.

The biggest jump in requests for aid was in California, where construction jobs have dried up. New York also saw a spike in unemployment aid applications which likely related to mass layoffs in the financial sector. Citi announced this week that it would be cutting 50,000 jobs before the end of the first quarter of next year. (See “Another Axe Swings At Citi”)

On Wednesday, the U.S. Federal Reserve increased its unemployment forecast for 2009 to between 7.1% and 7.6%, up from a high of 5.8% in its June report. (See “Fed Zepelin”) The Labor Department said unemployment spiked up to 6.5% in October in its latest monthly jobs report.

The government reported the largest monthly decline in the consumer price index in sixty years on Wednesday, suggesting that deflation may be a growing risk. This came in the wake of Tuesday’s Producer Price Index report which also showed a higher-than-expected slide in prices. (See "U.S. PPI Sags As Energy Dives.”)