More Americans are collecting jobless benefits than at any time in the last 26 years as companies rush to cut costs in a sinking economy.
The number of people on unemployment benefit rolls rose to 4.09 million in the week ended Nov. 22, the most since December 1982, the Labor Department said today in Washington. A separate report showed orders at U.S. factories tumbled in October by the most in eight years as demand collapsed at home and abroad.
AT&T Inc., DuPont Co. and Viacom Inc. today announced plans to eliminate more than 15,000 jobs as consumer spending falters and the recession deepens. The Labor Department tomorrow will report that the U.S. unemployment rate jumped to a 15-year high of 6.8 percent in November, according to the median forecast in a Bloomberg survey of economists.
“Businesses are battening down the hatches,” Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, said in a Bloomberg Television interview. “Job losses are going to continue to accelerate.”
Figures from the Commerce Department showed factory orders dropped 5.1 percent, more than forecast and the biggest decline since July 2000. Excluding transportation gear, bookings decreased for a third consecutive month.
Bonds rose while stocks fell. The benchmark 10-year note yielded 2.62 percent at 12:49 p.m. in New York, down from 2.66 percent yesterday. The Standard & Poor’s 500 Index was down 0.8 percent at 864.16.
Fed Perspective
Two regional Federal Reserve bank presidents warned the economic slump is likely to persist.
Dennis Lockhart, president of the Fed Bank of Atlanta, told a conference in New Orleans the economy was “in the midst of a long and very painful adjustment process.” Chicago Fed President Charles Evans, speaking in Dearborn, Michigan, said the U.S. faced a “very substantial downturn.”
Continuing claims were projected to rise to 4.03 million, according to the median estimate of economists surveyed by Bloomberg News. Labor revised total benefit rolls for the prior week up to 3.998 million from 3.962 million.
Initial jobless claims declined by 21,000 to 509,000 in the week that ended Nov. 29, which included the Thanksgiving Day holiday. Initial claims last week were lower than the 540,000 median estimate of economists surveyed. The government often has difficulty adjusting the figures for seasonal influences during holidays.
Trending Up
The four-week moving average of initial claims, a less volatile measure, climbed to 524,500, the highest since 1982, from 518,250, today’s report showed fast cash advance.
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, increased to 3.1 percent, the highest since 1992, from 3 percent. These data are reported with a one-week lag.
Forty-nine states and territories reported an increase in new claims, while 4 reported a decrease. The biggest increases were reported by California, Ohio and Michigan.
Claims reflect weekly firings and tend to rise as job growth — measured by the monthly non-farm payrolls report –slows.
So far this year, weekly claims have averaged 408,500, compared with an average of 321,000 for all of 2007, when employers added a total of 1.1 million jobs.
The economy has lost 1.2 million jobs so far this year as payrolls dropped for 10 consecutive months.
Tomorrow’s jobs report may show payrolls fell by 330,000 in November, the biggest one-month drop since 1982, according to the Bloomberg survey. The unemployment rate probably rose to 6.8 percent, the highest since 1993.
Longer Slump
Rising unemployment and the persistent credit crisis raise the likelihood the recession that began in December 2007 will turn into the longest slump in the post-World War II era.
What started as a housing slump has spread to manufacturing and services. The Institute for Supply Management’s factory index dropped last month to the lowest level since 1982, and its services gauge, which accounts for almost 90 percent of the economy, fell to the lowest level since records began in 1997.
Financial firms are among those making the biggest job cuts. JPMorgan Chase & Co., the largest U.S. bank by assets, said this week it will cut 9,200 jobs nationwide at Washington Mutual Inc. as it acquires the Seattle-based lender.
“We have seen a fairly significant dropoff in demand, starting in October,” Delta Airlines Inc. President Ed Bastian said on a Webcast of a Credit Suisse Group AG airline conference in New York this week. “The revenue environment is as cloudy as it’s ever been. We’ve never seen the level of demand destruction that some are forecasting for our business.”
Delta, the world’s largest carrier, said it will cut seating capacity by as much as 8 percent in 2009 and eliminate an unspecified number of jobs.
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