The vicious cycle between unemployment and the crumbling housing market has become downright savage.
New home sales are at an all-time low, home resales are at the lowest in 12 years, home prices are falling at a record rate and more than 5 million Americans are receiving jobless benefits on a regular basis.
The more people who are out of work for an extended time, the higher the chance they will be forced to foreclose on their homes. That's especially true if the value of their largest investment, their home, has dropped below what they have borrowed to live in it.
And the rising pain has spread to the banks that make the loans. The nation's banks lost $26.2 billion in the last three months of 2008, the first quarterly deficit in 18 years, as the housing and credit crises escalated.
The Federal Deposit Insurance Corp. said Thursday U.S. banks and thrifts also more than doubled the amount they set aside to cover potential loan losses, to $69.3 billion in the fourth quarter from $32.1 billion a year earlier.
Regulators say there were 252 banks in trouble at the end of 2008, up from 171 in the third quarter
"We have been looking for signs that the economy's rate of decline might be slowing, but can't find any," said Nigel Gault, chief U.S. economist at the IHS Global Insight consulting firm.
The Labor Department said Thursday that first-time requests for unemployment benefits jumped to 667,000 from the previous week's figure of 631,000. Analysts had expected a slight drop in claims.
The 667,000 new claims are the most since October 1982, though the labor force has grown by about half since then. The four-week average of initial claims, which smooths out fluctuations, rose to 639,000, the highest in more than 26 years.
JPMorgan Chase & Co. added to the bad news Thursday, saying that it would eliminate about 12,000 jobs as it folds in the operations of failed savings and loan Washington Mutual Inc. In December, the bank said it would cut a total of 9,200 jobs related to the WaMu deal. The 12,000 figure includes 2,800 jobs expected to be lost through attrition.
Separately, U.S. manufacturers saw orders for big-ticket goods plunge by a larger-than-expected 5.2 percent in January as global economic troubles cut demand from customers at home and abroad.
The latest report on U.S. factory activity, released by the Commerce Department, showed orders falling for a record sixth straight month. The previous record of four months came in 1992.
And new home sales tumbled 10.2 percent to a seasonally adjusted annual rate of 309,000 last month, the worst showing on government records going back to 1963.
The median sales price fell to $201,100 in January, a record 9.9 percent drop from the previous month. The median price is the midpoint, where half sell for more and half for less. But even lower prices and low mortgage rates haven't ended the housing market slump.
Sales of existing homes unexpectedly plunged in January to the lowest level in nearly 12 years as pessimism about the economy grew and buyers waited for President Barack Obama's plan to help revive the U.S. housing market.
All told, it points to more dismal news for an economy stuck in a negative cycle, where consumers scale back purchases as jobs vanish, home prices drop and stock portfolios shrink. Those factors fuel more job cuts by profit-starved businesses.
Companies are "becoming extremely cautious and ... shelving their capital spending plans and working with the minimal possible work force," said Zach Pandl, an economist at Nomura Securities International.
The number of people receiving unemployment insurance for more than one week also increased more than expected to 5.1 million. That's the fifth straight week the figure has set a new record-high on data going back to 1967, and compared with only about 2.8 million people a year ago.
As a proportion of the work force, the number of people continuing to receive benefits has reached its highest point since July 1983.
An additional 1.4 million people were receiving benefits under an extended unemployment compensation program approved by Congress last year, as of Feb. 7, the latest data available. That brings the total number of jobless benefit recipients to roughly 6.5 million.
The increase in continuing claims is an indication that many newly laid off workers are having difficulty finding jobs.
Economists consider jobless claims a timely, if volatile, indicator of the health of the labor markets and broader economy. A year ago, initial claims stood at about 359,000.
The labor market has deteriorated rapidly in recent months. Employers cut a net total of nearly 600,000 jobs in January, the highest monthly tally since 1974, sending the unemployment rate to 7.6 percent. Many economists expect the rate to reach 9 percent by the end of this year, even with the passage of President Barack Obama's $787 billion stimulus package.
More job losses were announced this week. The NFL said Wednesday that commissioner Roger Goodell has taken a 20 percent pay cut and the league dropped 169 jobs through buyouts, layoffs and other reductions. Spartanburg, S.C.-based textile maker Milliken & Co. said it would cut 650 jobs at facilities worldwide, while jeweler Zale Corp. said it will close 115 stores and eliminate 245 positions.
On Monday, troubled flash memory maker Spansion Inc. said it will lay off about 3,000 employees and computer chip maker Micron Technology Inc. announced it will slash as many as 2,000 workers by the end of August.
Among the states, New Jersey had the biggest increase in jobless claims for the week ending Feb. 14, a jump of 2,093 that it attributed to layoffs in the service, transportation and manufacturing industries. The next largest increases were in Virginia, Rhode Island, Vermont and South Dakota.
California saw the largest drop in claims, a decline of 16,550, which it attributed to fewer layoffs in service industries. Drops of 4,000 or more also were reported in Kentucky, Pennsylvania, Illinois and New York.