Bankruptcy

Jobless Numbers Rise Unexpectedly in Early August

By Meaghan Olson

The Department of Labor reported last week that initial unemployment claims for the week ending August 7 rose 2,000 from the previous week, to 484,000. This rise was apparently unexpected, and marks the highest rate since February of this year.

The news sent stock markets tumbling earlier this week as job growth remains frigid.

Here?s a closer look at the latest numbers from the Labor Department and what they mean:

• Initial claims rose to 484,000 from 482,000, meaning the unemployment rate will likely hold steady at 9.5 percent.
• The four-week floating average, which includes more data and so offers a check for highly volatile fluctuations, also rose to 473,500 ? an increase of 14,250.
• The average year-to-date number of insured unemployed people in the United States was 5.018 million.

And, while extended unemployment benefits were available to people in many states, some analysts are reportedly growing nervous about the implications of such persistently high job loss numbers. In fact, some seem to be worried that the country is locked into a self-perpetuating cycle of unemployment and a weak economy:

• Many business owners and those responsible for hiring new employees are reluctant to do so because of fears that the recession isn?t over yet: They?re reluctant to commit to increased spending because they?re worried that they won?t be able to pull in enough revenue to justify long-term hires.
• Many individuals, worried about losing their jobs or dealing with reduced hours, are also ?hunkering down? by spending less money, taking out fewer loans and focusing on saving more.
• Without adequate consumer purchases, some retailers are struggling to pull in enough income to stay afloat or grow. This means that they?re refraining from expanding or making new hires.

The problem is complex and involves all sectors of the economy and now, some analysts are suggesting that the recession will either end up having a ?double dip? - meaning we?ll plunge back into recession after a brief period of economic growth - or that the first period of recession never actually ended.

So what can you expect in the coming months? It doesn?t look like any significant changes are on their way in the near future, which could mean:

• Housing market struggles: Many people are still facing foreclosure, underwater mortgages and bankruptcy. So anyone looking to sell, build or buy a house may face difficulties.
• Credit remains tight: Unless you have a squeaky-clean credit report history, you may not qualify for attractive loan terms while the recession slogs on.
• Income options are limited: While jobless numbers remain high, you may have trouble finding additional income, which can be frustrating if you?re trying to pay down debt.
• Saving matters: Whether you?re just beginning to save or working on a hefty nest-egg, now is not the time to blow it ? you might need it for tough times ahead.

Full post as published by The Bankruptcy Blog on August 20, 2010 (boomark / email).