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The number of people filing for unemployment benefits hit a 26-year high last week, as the deepening recession forced more employers to cut jobs.

First-time claims for unemployment rose 5.4 percent, to 586,000 for the week ending Dec. 20, the Labor Department reported this morning. The last time claims were that high was Nov. 27, 1982. The four-week moving average, which is a less volatile indicator, rose to 558,000 from 544,250, also a 26-year high.

Orders for durable goods, such as appliances and televisions, dropped 1 percent to $186.9 billion, the U.S. Census Bureau said today. It was the fourth consecutive monthly drop but a much smaller decline than the 8.4 percent drop in October, thanks largely to orders for defense-related goods. Excluding those, which can vary widely quarter to quarter, new orders decreased by 0.9 percent.

Prices fell 1.1 percent last month, compared with 0.5 percent, the Commerce Department reported today. Much of that was due to falling gasoline and food prices. When food and energy are excluded, prices were actually flat.

Consumer spending continued to decline in November, falling 0.6 percent, even as consumers benefited from falling gasoline prices and retailers attempted to lure them into stores with deep discounts in an effort to salvage the holiday shopping season.

Retailers might have succeeded to an extent. November's drop was smaller than the 1 percent drop in spending in October. But just as they did in October, consumers also kept a chunk of their savings at the pump in their pockets. Personal savings as a percentage of disposable income was 2.8 percent in November, compared with 2.4 in October.

Facing an increasingly ominous economic outlook, President-elect Barack Obama and other Democrats are rapidly ratcheting up plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years.

That amount, more than the nation has spent over the past six years in Iraq, would rival the sum Congress committed last month to rescuing the country's financial system. It would also be one of the biggest public spending programs aimed at jolting the economy since President Franklin D. Roosevelt's New Deal.

Hints of a hefty new spending program began emerging last week. New Jersey Gov. Jon Corzine (D), an Obama adviser, and Harvard economist Lawrence H. Summers, whom Obama has chosen to lead his White House economic team, both raised the possibility of $700 billion in new spending. Yesterday, Obama adviser and former Clinton administration Labor secretary Robert Reich and Sen. Charles E. Schumer (D-N.Y.) also called for spending in the range of $500 billion to $700 billion.

Transition officials would not confirm that they are considering spending of that magnitude, but they made clear that economic conditions are dire, and suggested that Obama might be forced to delay his pledge to repeal President Bush's tax cuts for the wealthy.

Last week, Goldman Sachs said it expects the economy to shrink even faster by the end of the year, at a 5 percent annualized rate. Meanwhile, the Dow Jones industrial average dropped 5.3 percent for the week; and the nation's largest bank, Citigroup, sought government assistance to avoid collapse.

While Obama has set a goal of creating or preserving 2.5 million jobs by 2011, his economic team -- whose members are scheduled to be formally introduced at a news conference today in Chicago -- have yet to decide how that would be accomplished or how much it would cost.

Still, Austan Goolsbee, a spokesman for Obama on economic issues who is in line to serve on the White House Council of Economic Advisers, yesterday acknowledged that Obama's jobs plan will cost substantially more than the $175 billion stimulus program he proposed during the campaign.

"This is as big of an economic crisis as we've faced in 75 years. And we've got to do something that's up to the task of confronting that," Goolsbee said on CBS's "Face the Nation." "I don't know what the exact number is, but it's going to be a big number."

Republicans quickly criticized the idea of such a vast initiative, saying Congress should instead cut taxes to spur economic growth.

"Democrats can't seem to stop trying to outbid each other -- with the taxpayers' money," House Minority Leader John A. Boehner (R-Ohio) said in a statement. "We're in tough economic times. Folks are hurting. But the American people know that more Washington spending isn't the answer."

With financial markets fluctuating wildly and unemployment rising, Democrats want to push a stimulus package through Congress in January and have it ready for Obama's signature when he takes office Jan. 20. Over the weekend, the president-elect announced that he had instructed his advisers to assemble a massive jobs program that also would make a "down payment" on much of his domestic agenda.

The plan would include new funding for public-works projects to repair the nation's crumbling infrastructure, as well as a fresh infusion of cash to promote green technology and alternative-energy sources. It also would include targeted tax cuts for working families, students, the elderly and job-creating businesses that Obama touted on the campaign trail.