Jobless Claims Jump to Nine-Month High

Posted Aug 19th 2010 11:30AM by Mark Fightmaster
Filed under: Economic Data, Recession

Investors are digesting a bit of bad news concerning the economy, as initial applications for unemployment insurance increased to 500,000 during the past week.

The 12,000-claim rise suggests that the economy is slowing and that employers are cutting jobs. The last time initial claims for unemployment insurance were this high was back in November. The latest data does not include millions of unemployed receiving extended insurance, which is paid for by the federal government. Roughly 5.6 million unemployed workers were on this extended insurance as of the end of July.

First things first, this is bad news and has already had a negative effect on today's trading session. Further evidence of a slow day is that economists believed that claims would drop during the past week. This kind of surprise is never welcome by investors and may cause the bears to run and the bulls to hibernate during the trading session.

Taking a look at the bigger picture, this rather nasty surprise holds larger implications for the economy as a whole. The data suggest that the economy is creating fewer jobs than it created in the first half of the year. As a result, the unemployment rate has held steady at 9.5% during the past two months. Simply put, the economy is not strong enough to create new jobs, which means there is less money in the pipeline to help stimulate the economy.

With so many Americans applying for unemployment insurance and millions more on extended insurance, we have to doubt the strength of any perceived recovery. Watch for this doubt to creep in and act as an anchor on the market as a whole.

Tags: inthenews, jobless, jobless benefits, jobless claims, unemployment, unemployment insurance, unemployment rate

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Reader Comments (Page 1 of 1)

8-19-2010 @ 1:30PM

Vita Davis said...

I am not sure how they come up with the unemployment figures. I am amazed that we are only at 9.5 when many people have run out of unemployment. Are they counted in the unemployment figures? It doesn't take a rocket scientist to figure out if the middle class and blue collar workers are not working guess what there is no money to put back into the economy.

8-25-2010 @ 11:42AM

Napoleon Dynamite said...

How do you hopey, changey Obama voters like that hopey, changey you were promised, now that you have your hopey, changey? Maybe you hopey, changy people should correct your lack of wisdom and shallow perception this November!