Reuters reports that jobless claims jumped to their highest level since 2005. Specifically, U.S. workers applying for unemployment benefit rose by 38,000 last week, posting the highest reading since September 2005. I guess Fed Chairman Ben Bernanke had the statistics on his side when he testified that "It now appears likely that real gross domestic product [GDP] will not grow much, if at all, over the first half of 2008 and could even contract slightly."
The key is how the statistics performed relative to expectations. The 407,000 jobless claims reported in the week ended March 29 was way above economists' estimates of 370,000. If consumers lose their jobs, they'll have even more trouble borrowing to pay their rising costs of living. Although government statistics hide it -- anyone who drives or buys food knows that prices are rising.
Bloomberg News reports that job losses are coming from homebuilders and housing-related businesses, including lenders and financial service companies with exposure to mortgage-backed securities, are also stepping up firings. It also quotes an analyst who said, "400,000 is usually a trigger point when we consider recessionary times." I credit Bernanke for knowing a bit more about what's going on -- unlike the President who was shocked to learn about $4 a gallon gas. .
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
Oil hits record $127.43 on supply concerns, raised Goldman forecast
