New unemployment claims for benefits rose more than analysts forecasted for last week. Initial claims for benefits rose by 5,000 to a seasonally adjusted 417,000 claims. The rise was due in part by the striking Verizon Communications workers. Although there was a rise in unemployment in the U.S., the Labor Department states it is not near levels that would signal another recession.
Striking Verizon workers filed 8,500 jobless claims for benefits last week after submitting 12,500 claims the previous week. The strike ended earlier this week. Excluding the work stoppage by Verizon workers, layoffs appear to be stabilizing. Typically workers who walk off the job are not eligible for unemployment benefits, but some states have specific rules governing labor disputes.
The number of people who receive benefits under regular state unemployment programs fell to 3.6 million this week. That’s the fewest reported since Sept. 20, 2008, the week following the collapse of Lehman Brothers and the intensified ensuing financial crisis. At this point there are roughly 3.5 million additional people receiving extended unemployment benefits paid out by the federal government. These were emergency programs enacted by Congress. A total of 7.3 million unemployed workers received jobless benefits in the week ending August 6, 2011.
Businesses added 117,000 jobs in July. Twice as many new jobs are needed in order to significantly reduce the unemployment rate which now stands at 9.1%
Some analysts have suggested that the economy is improving. A huge jump in July for durable goods orders along with an uptick in consumer spending have investors feeling a little uneasy. The increase in consumer spending could only be the usual back to school purchases typically made in July and August. Investors will be watching for consumer spending to make modest gains through the fall as just another gauge of a possible pending recession looms.