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US Weekly Jobless Claims Drop More Than Expected

Shoppers in a U.S. store
Shoppers in a U.S. store

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The number of newly laid-off U.S. workers filing claims for unemployment benefits fell more than expected last week.  A report Wednesday from the Labor Department shows 466,000 workers signed up to receive unemployment compensation.  That's the lowest level in more than a year and a possible sign the U.S. economy is on the mend.

For the first time this year, the number of Americans filing for unemployment benefits fell below 500,000.  Personal incomes rose modestly for a second straight month, and consumer spending picked up in October.

In California, where unemployment is 12.5 percent, career counselor Loree Levy says the state added 26,000 new jobs.

"We're also seeing big job gains in employment services, the temporary job types of hiring," said Loree Levy. "That's usually an early indicator of an economic recovery."

But in Los Angeles, the long line of people waiting for free food for the Thanksgiving holiday tells a different story.  Those who camped here overnight say the hard times are far from over.

"I told my sister it's going to be like this cause a lot of people is out of work right now," said a woman.

"No work," said a man. "There's no jobs.  People are getting laid off.  People losing their houses."

Some fear the sharp improvement in jobless claims and consumer spending may be temporary. 
Economist Gus Faucher at Moody's Economy.com says the U.S. job market remains bleak. 

"It's just a very difficult environment for people and it's really not going to get a whole lot better probably for another half year or so," said Gus Faucher.

With the jobless rate likely to top 10.5 percent by 2010, economists expect the recovery to be sluggish.  Some worry the uncertainty will cause consumers to cut back on spending just as the crucial holiday shopping season begins.
Still, economists predict holiday sales will be up slightly over last year.

"The good news is that the recession is over and the economy is expanding," he said. "We're seeing that in almost all of the numbers.'

Fueling some of the optimism is a six percent increase in home sales last month.
Economists say the collapse of the U.S. housing market was a key factor that led to the worst financial crisis in decades.
 

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