A government data showed that US jobless claims rose to a higher than expected 654,000 in the past week as businesses moved rapidly to cut payrolls amid a prolonged recession. Even with the unemployment rate presently at a 25 year high of 8.1%. The Labor Department said that the number of initial claims for unemployment benefits rose by 9,000 in the week ending March 7th 2009 from the previous week’s revised figure of 645,000.
The department figures showed that the figure, which measures the number of jobless claims filed by individuals seeking to receive state jobless benefits, was bigger than the 644,000 expected by analysts. It brought the much watched four week moving average to 650,000, the highest level since 1982. According to the department, continuing claims for the week ending February 28th 2009 increased to a new record high of 5.317 million from a revised 5.124 million. The US unemployment rate soared from 7.6% in January to 8.1 million in February, the highest since December 1983. The bleak labor market underscores the challenges facing President Barack Obama’s administration in stabilizing a teetering financial system and pulling the shrinking economy out of a downward spiral.
Based on the most recent government estimate, US gross domestic product contracted at an eye popping 6.2% annual pace in the fourth quarter of 2008, and some analysts say the downturn may be even worse in the first quarter of 2009.