“The unemployment rate is expected to edge up to 9.8 percent from 9.7 percent in May.”
Fears that the economic recovery is fizzling grew Thursday after the government and private sector issued weak reports on a number of fronts.
Unemployment claims are up, home sales are plunging without government incentives and manufacturing growth is slowing.
Meanwhile, 1.3 million people are without federal jobless benefits now that Congress adjourned for a weeklong Independence Day recess without passing an extension. That number could grow to 3.3 million by the end of the month if lawmakers can’t resolve the issue when they return.
All of this worries economists. As jobless claims grow and benefits shrink, Americans have less money to spend and the economy can’t grow fast enough to create new jobs. Some are revising their forecasts for growth in the third quarter. Others are afraid the country is on the verge of falling back into a recession.
“We find the level and direction in jobless claims somewhat troubling and the increase is likely to feed double-dip fears,” said John Ryding, an economist at RDQ Economics in a note to clients.
New claims for benefits jumped by 13,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. The four-week average, which smooths fluctuations, rose to 466,500, its highest level since March.
Claims have remained stuck above 450,000 since the beginning of the year. Requests for unemployment benefits dropped steadily last year after reaching a peak of 651,000 in March 2009. Economists say they will feel more confident about sustained job growth when initial claims fall below 425,000
Adding to that is the growing number of people who stand to lose government support while they search for work.
For the third time in as many weeks, Senate Republicans blocked a bill Wednesday night that would have continued unemployment checks to people who have been laid off for long stretches. The House is slated to vote on a similar measure Thursday, though the Senate’s action renders the vote a futile gesture as Congress prepares to depart Washington for its holiday recess.
During the recession, Congress added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states. Democrats in the House and Senate want them extended through November. Republicans want the $34 billion cost of the bill to be paid for with money remaining from last year’s stimulus package. Democrats argue that it is emergency spending and should be added to the deficit.
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