Jobless Claims Hit 25-year High, Imports Plunge

 
 
By Reuters -  |  Posted 2008-11-13
 
 
 

WASHINGTON (Reuters) - The number of workers drawing jobless benefits hit a 25-year high this month and U.S. imports suffered a record drop in September, according to reports on Thursday that underscored a rapid drop-off in the U.S. economy.

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

In addition, the number of workers still on the benefit rolls after drawing an initial week of aid hit 3.9 million in the week to November 1, the highest since January 1983.

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

"We are looking at the biggest financial crisis since the Great Depression and the biggest economic crisis we have had in the United States since the early 1980s."

The U.S. economy has been suffering from a housing market crash, a lack of credit and an auto industry that is struggling to survive. One source 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 for unemployment insurance added to growing concerns that the current economic slump could be deeper and longer than initially expected. The dollar weakened against the euro.

"EVERYBODY IS HURTING"

A report from the Commerce Department showed a record drop in imported 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, but imports from the European Union fell 3.8 percent and imports from the Organization of Petroleum Exporting Countries slumped 27.1 percent as imported oil fell by a record $12.41 per barrel in September.

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

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

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

Wal-Mart Stores Inc., the country's largest retailer, continues to benefit as the struggling consumers flocked to the discounter, which posted better earnings than analysts had expected.

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