Jobless claims highest in 26 years
The number of Americans who applied for unemployment benefits for the first time tops 600,000. Continuing claims set record high.
NEW YORK (CNNMoney.com) -- The number of Americans filing for first-time unemployment benefits surged last week to a level not seen since October 1982, according to a government report released Thursday.
The number of initial jobless claims jumped to a much-higher-than-expected 626,000 in the week ended Jan, 31, according to the Labor Department. That's up from a revised 591,000 in the previous week and the highest level since the last week of October 1982, when jobless claims reached 637,000.
Economists polled by Briefing.com were expecting the number to come in at 580,000 for the most recent week.
The four-week moving average for weekly claims totaled 582,250, up from the previous week's revised figure of 543,250.
One economist said that as bad as the report is for the labor markets, the sharp spike in the initial claims could be a peak.
That would indicate the recession is closer to the end than it is to the start, according to Robert Brusca, chief economist at Fact and Opinion Economics.
"In recessions, you tend to get spike highs in claims," said Brusca. "They tend to get up to some high level very quickly and then they tend to back off."
"History tells you that claims don't continue to deteriorate this rapidly for that long," said Brusca.
The number of workers receiving unemployment checks for one week or more rose to a record 4,788,000 in the week ended Jan. 24, the most recent data available. That tops the previous week's record of 4,768,000.
Brusca does not think that continuing claims can stay at record levels for much longer, either. The economy fell quickly, and that should lead to a sharper recovery.
Brusca said a sharp recovery would also be facilitated by the government stimulus plan and aggressive monetary policy. The economy has "extremely low interest rates to help foster a turn around and a lot of fiscal help coming from the government," he said.
The four-week moving average for continuing claims was 4,672,000, up from the previous week's revised moving average of 4,628,000.
The number came ahead of the government's January unemployment report, due out Friday. The unemployment rate is expected to jump to 7.5% in January, up from 7.2% the previous month, according to a consensus estimate from Briefing.com. Employers are expected to have slashed 500,000 jobs in the month.