The Latest Jump of US Jobless Claims Shows the Ailing US EconomyBy Dipankar Das, Gaea News Network
Monday, August 16, 2010
The new claim for US unemployment insurance rose by 2000 to 484, 000. This is the highest level of unemployment in the last six month and it proves that the labor market recovery is very unsteady. Economists projected the unemployment claims around 469 000. U.S. stocks closed down for a third straight day, pressured by the data and a disappointing revenue forecast from tech giant Cisco Systems Inc. The prices for U.S. government debt goes down as investors locked in recent gains and the dollar shot up broadly on Thursday as traders worried about the global outlook sought a safe place.
The Fed said that the economic recovery is not as good as it was expected and it requires strong steps to improve the economy. According to the indication of Central bank, that growth in China is also slowing and trade and inventory data that suggested the second quarter growth of US economy is weaker than the projection. Thus the combined effect caused US stocks to erase this year’s gain. To make the matter worse, the euro zone’s statistical agency said on Thursday that the industrial production of 12 nation currency bloc dropped in June.
Data for the United States has been consistently weak for the past couple of months because job growth in the private sector lacks expectations and the unemployment rate remains at 9.5 percent. That has caused the growing risk that the economy may face renewed recession or face a trend towards deflation as the bleak jobs market pressures incomes and prices.
An NBC News/Wall Street Journal poll released on Wednesday showed the gloomy picture of the economy was rising. This is a bad sign for lawmakers who will be facing voters in November. Majority Democrats are at risk of losing control at House of Representatives as well as at the senate. The poll found that almost two-thirds of Americans believe the U.S. economy will get worse further which is up from 53 percent who felt that way in January. Nearly six in 10 of those surveyed said the country is heading in the wrong direction.
The labor department said that the rise of oil price made the cost of imported goods most expensive in the last three months than had been thought. Import prices rose 0.2 percent last month after going down to 1.3 percent in June and a revised 0.8 percent in May. In its report on jobless claims, the department said a four-week moving average of new filings rose 14,250 to 473,500 and that was the highest level since the week ended February 20.