Jobless benefits hit 25-year high

Thursday November 6, 5:05 pm ET
By Jeannine Aversa, AP Economics Writer Jobless Americans continuing to draw unemployment benefits at 25-year high; retail sales slump WASHINGTON (AP) -- The number of out-of-work Americans drawing unemployment benefits has surged to a 25-year high, while shoppers turned extra frugal, further proof of the damage from sinking economy, credit problems and financial stresses.

The Labor Department reported Thursday that the number of people continuing to draw unemployment benefits jumped by 122,000 to 3.84 million in late October, well above analysts' estimates of 3.74 million. That was the highest level since late February 1983, when the country was struggling to recover from a long and painful recession. The year-ago tally was 2.59 million people.

New filings for jobless benefits for the week ending Nov. 1 dipped to 481,000, a still-elevated level that suggests companies are in a cost-cutting mode. The increase in continuing claims lags by a week, and represents the total for the week ending Oct. 25.

The work force was much smaller in February 1983, when the number of people continuing to claim benefits was 3.88 million. At that time, about 87.2 million Americans were in the work force, compared with almost 134 million today. That's one reason the unemployment rate was 10.4 percent in February 1983, compared with 6.1 percent last month.

Democrats in Congress are pushing to include an extension of unemployment benefits in a new stimulus package, which could be taken up this month. Benefits last 26 weeks.

Congress approved a special 13-week extension of benefits in June, and the department said about 773,000 people claimed benefits through that program for the week ending Oct. 18, the most recent data available. That's in addition to the 3.84 million that are receiving benefits through the traditional program.

Americans hit by layoffs, shrinking nest eggs and other stresses are pulling back even more, sending sales at many big retailers down in what may have been the weakest October in decades. That further darkened the outlook for the holiday sales season.

Target Corp. and Costco were among the many retailers reporting sales declines last month. Wal-Mart Stores Inc., the world's largest retailer, however, logged a sales gain.

The country's economic state has rapidly deteriorated in just a few months. The economy contracted at a 0.3 percent pace in the July-September quarter, likely signaling the start of a recession. It was the worst showing since the last recession, in 2001, and reflected a massive pull back by consumers.