Economists note that the high continuing claims level reflects labor market stress, and the long time it takes for those downsized to find comparable employment. Few companies are filling vacancies, many major corporations have announced large layoffs, and even temporary work assignments are declining, another negative sign for the labor market.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 583,000. Claims for the previous week were revised to 591,000. The 4-week moving average also rose 39,000 to 582,250.

Economist Peter Dawson told BloggingStocks Thursday U.S. economic conditions continue to deteriorate. "Passing the 600,000-level for initial claims is troubling, and reflects widespread economic stress, so the sooner Congress passes the fiscal stimulus package, the better," Dawson said. "Tax cuts help, but what the economy really is suffering from now is a lack of demand, and that means jobs, which calls for a spending-oriented stimulus."

The impact of a rising jobless claims rate on investors? Rising new unemployment claims point to likely softening demand, which almost always translates into lower corporate revenue and earnings, which is bearish for the stock market.

Economic Analysis: The weekly data speaks for itself: companies continue to trim workforces. Assuming a U.S. economic recovery that starts in Q3, jobless claims, being a lag indicator, probably would not begin to recover until late 2009 / early 2010.