Long Term U.S. Unemployment at 25 Year High

Submitted by SadInAmerica on Fri, 11/14/2008 - 2:43pm.

The US economy continues to contract with the number of people claiming unemployment long-term benefit hitting a 25-year-high and the US trade deficit narrowing as a result of the slowdown.  The impact of yet more bad news pushed the Dow Jones index down by as much as 115 points at one stage on Wall Street, before closing up 552 points.

The slide however was not as sizeable as some might have feared given the 411 point tumble on Wednesday following US Treasury Secretary Hank Paulson's decision to abandon his plan to purchase distressed mortgage assets.

Investors were concerned by the latest jobless numbers, however, with initial claims for benefits rising by 32,000 to 516,000 in the week to November 8 - the highest its been since September 2001, in the aftermath of the September 11 terror attacks.

Even the four-week average of new claims - used to smooth possible volatility in the data - rose to 491,000, its highest level in 17 years.

Goldman Sachs' economist Jan Hatzius said that - apart from the post-September 11 peak and one "anomalous week" in the early 1990's recession - "you have to go back to the early 80's recessions to find a time when claims were consistently at or above the current level."

Mr Hatzius warned that if claims remain over the 500,000 level "this will presage substantial further labour market deterioration."

Separate data showed US exports falling at the fastest pace since September 2001 as a result of the credit crunch and the slowing global economy.

The trade deficit shrank by 4.4pc to $56.47bn in September, as purchases of cars, oil and other international goods dwindled.

Hedge fund manager George Soros, speaking during a grilling of hedge funds on Capitol Hill, warned that "a deep recession is now inevitable and the possibility of a depression cannot be ruled out."

Mr Soros spoke alongside sub-prime billionaire John Paulson and Citadel chief Ken Griffin before the House committee on government oversight, which is looking into regulation for the industry, and its possible role in the breakdown of the global financial system.

James Quinn - November 13, 2008 - source TelegraphUK

Tag this page!
Submitted by SadInAmerica on Fri, 11/14/2008 - 2:43pm.