Jobless Claims Hit 25-year High, Imports Plunge

WASHINGTON(Reuters) – The number of workers drawing jobless benefits hit a25-year high this month and U.S. imports suffered a record drop inSeptember, according to reports on Thursday that underscored a rapiddrop-off in the U.S. economy.

The number of U.S. workers filing new claims for jobless benefitsrose by an unexpectedly steep 32,000 last week to 516,000, the highestlevel since the weeks following the September 11, 2001 attacks, theLabor Department said.

In addition, the number of workers still on the benefit rolls afterdrawing an initial week of aid hit 3.9 million in the week to November1, the highest since January 1983.

"This is obviously (a) very, very serious deterioration in the labormarket, more than a lot of people had expected even a couple of monthsago," said Scott Brown, chief economist with Raymond James &Associates in St. Petersburg, Fla.

"We are looking at the biggest financial crisis since the GreatDepression and the biggest economic crisis we have had in the UnitedStates since the early 1980s."

The U.S. economy has been suffering from a housing market crash, alack of credit and an auto industry that is struggling to survive. Onesource of growth through the first half of the year has been exports,but that appeared to be stalling.

U.S. exports fell at the fastest pace since September 2001 as the credit crunch slowed economies around the world.

U.S. stocks fell in early trading as the big jump in claims forunemployment insurance added to growing concerns that the currenteconomic slump could be deeper and longer than initially expected. Thedollar weakened against the euro.

"EVERYBODY IS HURTING"

A report from the Commerce Department showed a record drop inimported oil prices and the lowest auto imports since February 2004,factors that helped trim the monthly trade gap to $56.5 billion,slightly below the $57 billion expected on Wall Street.

U.S. imports from China hit a record $33.1 billion in September, butimports from the European Union fell 3.8 percent and imports from theOrganization of Petroleum Exporting Countries slumped 27.1 percent asimported oil fell by a record $12.41 per barrel in September.

"The drop in oil price is a factor no doubt about it. People arejust not driving that much more," said Joel Naroff, president of NaroffEconomic Advisors in Holland, Pennsylvania. "We are seeing a decline ineverything — imports and exports … It tells me everybody is hurting."

U.S. goods exports fell by a record $10.4 billion, with all majorcategories showing a decline. A sharp drop in exports of capital goodswas led by civilian aircraft, after posting big numbers in the twoprior months.

A separate report showed consumer spending continues to drop. U.S.retail sales fell for a second straight month, dipping 1.5 percent inOctober, according SpendingPulse data, which excludes auto sales.

Wal-Mart Stores Inc., the country’s largest retailer, continues tobenefit as the struggling consumers flocked to the discounter, whichposted better earnings than analysts had expected.

(Additional reporting by Lisa Lambert; Editing by Tom Hals)