Claims for Unemployment Benefits Reach a 26-Year High

To go along with massive job cuts announced by various U.S. companies in the past few weeks, unemployment claims reached a record high last week, a continuation of the bad news coming from the labor market.

According to a report released by the Labor Department on Thursday, applications for first-time unemployment benefits in the week of Dec. 6 rose to 573,000 from 515,000 the week before. It’s the highest level for first-time claims since November 1982

Wall Street economists had expected claims to increase modestly to 525,000.

The four-week average of unemployment claims – which tends to smooth any temporary distortions -- didn’t make the picture look any better as it reached 540,500, also the highest since late 1982.

The number of people continuing to claim jobless benefits also rose by 338,000 to 4.4 million, which exceeded economists’ expectation of 4.1 million. The increased marked the largest jump in continuing claims since November 1974.
 
A Labor Department spokesperson told the Associated Press that the rise in claims could be due to state unemployment offices catching up from the week of the Thanksgiving Holiday. Labor offices are typically closed at least two days during that week, making the week after Thanksgiving a historically large week for initial unemployment claims as offices catch up on a backlog of claims.

Economists consider unemployment claims as a timely and necessary way to depict the health of the labor markets and the economy. In conjunction with last week’s monthly unemployment data, (“U.S. Lost 533,000 Jobs in November; Unemployment Rate 6.7%,” Dec. 5), the labor market in the U.S. could be plumbing new depths.