The Associated Press
AP - January 14, 2010
New reports Thursday showed that the economy continues to struggle, as new jobless claims rose more than expected, retail sales fell and more people faced foreclosures.
The number of newly laid-off workers requesting unemployment benefits rose more than expected last week as jobs remain scarce amid a sluggish economic recovery.
The Labor Department said new claims for unemployment insurance rose by 11,000 to a seasonally adjusted 444,000. Wall Street economists polled by Thomson Reuters expected an increase of only 3,000.
The rise was partly a result of large seasonal layoffs in the retail, manufacturing and construction industries, a Labor Department analyst said. The second week of January usually sees the largest increase in claims, unadjusted for seasonal trends, during the year, the analyst said.
Still, the increase didn't disrupt the longer-term downward trend in claims. The four-week average dropped to 440,750, its 19th straight drop and lowest level since August 2008.
Initial claims are considered a gauge of the pace of layoffs and an indication of companies' willingness to hire new workers.
Claims have dropped steadily since last fall, as companies cut fewer jobs, raising hopes that hiring may increase soon. Initial claims have dropped by nearly 90,000, or 17 percent, since late October. Two weeks ago, new claims dropped to their lowest level since July 2008.
Despite the recent drop, the economy is not yet consistently generating net increases in jobs. The Labor Department said last week that employers cut 85,000 jobs in December, after adding only 4,000 in November. The unemployment rate was unchanged at 10 percent.
Meanwhile, the number of people continuing to claim benefits dropped sharply to 4.6 million from 4.8 million the previous week. The continuing claims data lags initial claims by a week.
Retail Sales Post Record Drop For Year
The weakness in consumer demand highlighted the formidable hurdles facing the economy as it struggles to recover from the deepest recession in seven decades.
The 0.3 percent drop was greater than the 0.5 percent rise that private economists had been expecting. Excluding autos, sales dropped by 0.2 percent, also weaker than the 0.3 percent rise analyst had forecast.
For the year, sales were down 6.2 percent, the biggest decline on records that go back to 1992. The only other year that sales had fallen was 2008, when they slipped by 0.5 percent.
Economists said the drop in retail sales in December underscored how tentative the economic remains given all the headwinds facing consumers.
"We cannot expect a true turnaround in consumption until the jobs numbers improve significantly and consistently," Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.
A separate report showed that business inventories rose by 0.4 percent in November. It marked the second straight month that stockpiles have increased after a stretch of 13 monthly declines in inventories. The hope is that future sales gains will convince businesses to keep restocking, a development that will boost production and provide support for the recovery.
Foreclosures Continue To Climb
Also In December, more than 349,000 households, or one in 366 homes, were hit with a foreclosure-related notice, RealtyTrac Inc. reported Thursday. That represents a 14 percent spike from November and a 15 percent jump from December 2008.
A record 2.8 million households were threatened with foreclosure in 2009, and that number is expected to rise this year as more unemployed and cash-strapped homeowners fall behind on their mortgages.
The number of households that received a foreclosure-related notice rose 21 percent from 2008. One in 45 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions.
Banks repossessed more than 92,000 homes, up 19 percent from November. That increase was likely due to lenders working to clear their books at the end of the year, RealtyTrac said.
The foreclosure crisis isn't letting up. Between 3 and 3.5 million homes are expected to enter some phase of foreclosure this year, said Rick Sharga, senior vice president of Irvine, Calif.-based RealtyTrac, which began tracking the data five years ago. Copyright 2010 The Associated Press