Jobless claims at 7-year high
Initial filings for unemployment rise more than expected to highest level since September 2001.
NEW YORK (CNNMoney.com) -- The number of out-of-work Americans filing new claims for unemployment insurance rose last week to a 7-year high, according to a government report released Thursday.
The Department of Labor said initial filings for state jobless benefits increased by 1,000 to a seasonally adjusted 497,000 in the week ended Sept. 27.
The consensus estimate of economists surveyed by Briefing.com was for a decline to 475,000. The prior week was revised up 1,000 to 496,000.
The number of people filing for jobless benefits is the highest since the 517,000 reported in the week ended Sept. 29, 2001, when unemployment soared in the wake of the Sept. 11 terrorist attacks. At this time last year, the figure stood at 324,000.
The Labor Department said that about 45,000 of the new claims were due to the effects of Hurricanes Gustav and Ike.
That helped increase the seasonally adjusted four-week moving average by 11,500 to 474,000 from the previous week's unrevised average of 462,500. A level at or above 400,000 for the four-week average has also been present throughout the last two recessions. For the same period last year, the four-week moving average was 318,500.
The number of Americans continuing to collect uninsurance claims increased by 48,000 to 3,591,000 for the week ended Sept. 20, the most recent week available. The 4-week moving average jumped 46,750 to 3,528,500 from the preceding week.
Bernard Baumohl, chief global economist of the Economic Outlook Group, said the large number of claims speaks poorly of the economic situation.
"We're in recession territory for initial claims, that sends an ominous signal for payroll losses for Friday," Baumohl said.
Economists from Briefing.com expect September job losses to spike to 105,000 and for the unemployment rate to remain steady at 6.1% when the government's monthly report is released Friday. The economy already has lost 605,000 jobs this year.
Baumohl also expects the monthly unemployment rate to increase in September, and to exceed 7% going into 2009.
The nation is in the midst of an economic crisis that has frozen credit to businesses and caused several prominent banks and investment houses to fold. The credit crunch has led to the Treasury Department proposal for a $700 billion package to buy severely undervalued securities in an effort to unfreeze the market.
The Senate approved the package Wednesday, sending it to the House, which failed in a first effort to pass the legislation earlier in the week.