The number of people receiving unemployment benefits has reached an all-time record, the government said Thursday, and more layoffs are spreading throughout the economy.
The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967. That's an increase of 159,000 from the previous week and worse than economists' expectations of 4.65 million.
As a proportion of the work force, the tally of unemployment benefit recipients is the highest since August 1983, a department analyst said.
The total released by the department doesn't include about 1.7 million people receiving benefits under an extended unemployment compensation program authorized by Congress last summer. That means the total number of recipients is actually closer to 6.5 million people.
Businesses continued to hemorrhage jobs Thursday. Ford Motor Co. reported a fourth-quarter loss of $5.9 billion and said its credit arm would cut 20 percent of its work force, or 1,200 jobs. Eastman Kodak Co. said it's cutting 3,500 to 4,500 jobs, or 14 to 18 percent of its work force, as it posted a $137 million quarterly loss on plunging sales of photography products. Black & Decker Corp. said its fourth-quarter profit tumbled 77 percent and the power tools manufacturer announced about 1,200 job cuts.
More signs of the deepening recession came in separate government reports on home sales and durable goods.
New home sales drop
The Commerce Department said Thursday that new home sales fell 14.7 percent in December to a seasonally adjusted annual rate of 331,000, the lowest pace on records dating back to 1963. For 2008, builders sold 482,000 homes, the weakest results since 1982.
The median price of a new home sold last month was $206,500, a drop of 9.3 percent from a year ago. The median is the point where half the homes sold for more and half for less.
Meanwhile, new orders for durable goods dropped by 2.6 percent last month, even worse than the 2 percent decline economists expected. Orders fell 5.7 percent for the year, the second biggest drop on government records, exceeded only by a 10.7 percent plunge in 2001, according to the Commerce Department.
The financial markets fell on the news. The Dow Jones industrial average dropped about 115 points in midday trading.
The tally of Americans filing new jobless benefit claims rose slightly to a seasonally adjusted 588,000 last week, from a downwardly revised figure of 585,000 the previous week. That also was worse than analysts' forecast of 575,000 new claims.
The number of initial claims is close to the 26-year high of 589,000 reached in late December, though the work force has grown by about half since then.
The record number of ongoing benefit claims is an indication that laid-off workers are having a difficult time finding new jobs, economists said.
"This highlights the key point that the trend in gross hirings has slowed as abruptly as the trend in gross firings ... has risen," Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a research note.
Claims have doubled
A year ago, continuing claims stood at about 2.7 million, less than half their current level when the extended unemployment program is included.
Abiel Reinhart, an economic analyst at JPMorgan Chase, said the report indicates the unemployment rate likely rose this month. January's figure will be released Feb. 6.
The rate jumped to 7.2 percent in December, a 16-year high. Employers cut an average of 510,000 jobs in the last three months of 2008, and may cut a similar amount in January, Reinhart said.
The crush of new and continuing claims has overwhelmed many states' ability to process them all. Electronic filing systems crashed in three states earlier this month, and last week Michigan said it would hire 276 workers and open a fourth call center to handle increased phone traffic.
President Barack Obama's $819 billion economic stimulus package, approved by the House Wednesday and now on its way to the Senate, would provide $500 million to the states to upgrade their unemployment insurance systems. The measure also continues the extended unemployment compensation program, which adds up to 33 weeks of benefits, until the end of the year.
Companies have announced a huge number of layoffs this week as they prepare for an extended period of economic weakness. Economists expect the current recession, which began in December 2007, to be the longest since World War II.
Starbucks Corp. on Wednesday said it would cut 6,700 jobs. The coffee company also said it would close 300 underperforming stores, on top of 600 it already planned to shut down.
Time Warner Inc.'s AOL division is cutting up to 700 jobs, or about 10 percent of the online unit's work force. And IBM Corp. has cut thousands of jobs in its sales, software and hardware divisions in the past week, without announcing specific numbers.
Boeing Co., Pfizer Inc., Home Depot Inc. and other U.S. corporate titans also have announced tens of thousands of job cuts this week alone.
Companies have announced about 130,000 layoffs in January, according to an Associated Press tally.
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