According to the Labor Department, initial claims for state unemployment benefits increased 12,000 last week. Last week's advance pushed the total number of claims (669,000) to the highest level since October 1982.

Moreover, the 669,000 claims are up 72% from the same period last year. The four-week average of initial claims increased 6,500 to 656,750; hitting its highest point since October 1982.

For the week ending March 21, the number of people collecting state unemployment benefits increased 161,000 to 5.73 million. Not only is this level 96% higher than a year ago, but it is also a new record (should we sound bells and whistles?).

Factory orders fell in December for a record fifth month in a row. With December's numbers now in the books, it is official that last year was the worst year for manufacturers since 2002.

Going into today's announcement, everyone agreed that factory orders had probably dropped in December, but analysts were not expecting the decline to be as steep as the actual figures revealed. Analysts had estimated that we would see a 3% dip in factory orders for the month, but the actual numbers indicate a deeper 3.9% reduction during December.

The deflation drumbeat continues. As prices drop, businesses produce less and they cut the people doing the producing. With the exception of stocks and oil, it seems that nowhere are prices falling faster than in houses -- slashing $10 trillion in consumer wealth. And the spike in foreclosures adds more supply to the market for houses, just as demand keeps falling.

The foreclosure forecasts and initial unemployment claims figures released today are indeed sobering. The spike in foreclosures is expected to come from Pay Option mortgages, which let borrowers pay less than they owe each month and add that amount into the principal. But the Pay Option resets the rate upward when the new principal rises above 110% of the original amount.

Thanks in part to a 63% -- or $1,053 -- monthly increase in the current $1,672 average payment, foreclosures are expected to rise 125% to 3.6 million by 2010 over the three million that have occurred since 2006. Meanwhile, initial applications for jobless benefits rose to 573,000 in the week ending December 6 -- 9% more than the expected 525,000 -- from 515,000 the week before.

If this is what an Ownership Society is all about, maybe it's time to forget about Ownership and create an Affordership Society where people live within their means instead of borrowing to buy things they can't really afford.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

To provide further fuel for the economic fire, jobless claims in the first week of November were higher than they have been since September 2001. My hunch is that the current recession will be worse than the one in 2001. And the reason is that the 2001 recession was an equity-led recession, while the current recession is debt-led.

How bad are the jobless statistics? Initial jobless claims grew by 32,000 to a larger-than-forecast 516,000 in the week ended November 8th, up 7% from a revised 484,000 the prior week. Big banks, which have already fired 150,000 people, recently announced an additional 12,000 layoffs.

Why is this recession so much worse than the one in 2001? As I posted in January -- when I suggested then that investors get out of stocks -- equity-led recessions limit their damage to people and companies that own over-valued stock. But debt-led ones blow up a bigger bubble that forces the rapid sale of collateral -- like houses, cars, stocks, and other assets -- thus driving down prices and creating a vicious cycle of closing businesses and firing people.

That's not good for an economy that depends on consumer spending for 70% of its growth.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons From Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008.

Fresh statistics reveal an economy that is in grim shape -- and just in time for the election. Jobless claims are higher than they have been since September 2001 and factory orders plunged 4%. If we elect the McCain whose chief economic advisor thinks we're whiners, we can keep this streak going for another four years.

The economic statistics are grim. Initial jobless claims were higher than they've been in seven years. They increased 1,000 to 497,000 last week thanks in part to Gulf Coast hurricanes and staff cuts due to low demand. Meanwhile, the 4% decline in factory orders was worse than anticipated. Economists had forecast a 3% drop after a previously reported 1.3% increase in July. Why so bad? With banks reluctant to lend, companies can't get the funds they need to buy that factory equipment.

Could we be getting whitewashed economic statistics? If GDP growth is reported as positive for the recently departed third quarter, I will be surprised. If you like the effects of deregulation and tax cuts on our economy, there is ample opportunity to keep those policies firmly in place for four more years. With the S&P 500 down 22% so far this year, I am not sure who can afford to vote that way.

But congratulations are in order for their ability to prosper under such difficult economic conditions.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Two economic reports just out suggest that the fundamentals may not be solid. Jobless claims spiked and durable goods orders were worse than expected. People without jobs have a harder time supporting economic growth -- they bear two-thirds of the burden for that. And if businesses -- which are big buyers of durable goods -- shoulder the other third, it would not be too surprising if GDP was shrinking.

Jobless claims increased by 32,000 to 493,000 in the week that ended September 20 -- 50,000 claims were due to Hurricanes Ike and Gustav -- from a revised 461,000 the prior week. Economists in a Bloomberg News survey got it wrong -- expecting a drop to between 450,000 from 455,000. Through August, the economy has lost 605,000 jobs. It is likely that more job losses are on the way.

Meanwhile a 4% drop in durable goods bookings was more than twice the drop that economists had projected. According to Bloomberg News, 74 economists it surveyed expected a 1.9% decline after previously reporting a 1.3% increase in July. Since companies generally take out financing to purchase durable goods, the clenching of credit markets could be contributing to the larger than expected decline.

The right thing to do is to encourage the natural process of cleaning the excess out of the bubble economy. The sooner we get through this pain, the faster we can start to rebuild.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

The Associated Press reports that jobless claims -- at 455,000 -- hit a six-year high in July. Analysts underestimated the total by 25,000, as they forecast 430,000 such claims. When combined with this morning's disappointing July retail sales results, the economy appears to be doing worse than experts expected.

AP reports that many companies announced layoffs recently. These include General Motors Corp. (NYSE: GM), Weyerhaeuser Co. (NYSE: WY), Starbucks Corp. (NASDAQ: SBUX) and Bennigan's restaurants. More such layoffs are likely to be announced as the economy prepares a recessionary banquet of woes for the presidential candidates.

The lesson for those interested in economics is pretty clear. You can create the illusion of prosperity by borrowing lots of money. If someone lends me $100 million and I buy a big estate on Long Island, people will think I am rich. But if I can't pay back the loan, the bank will kick me out of the house and suddenly I won't look so well off.

That's what the banks are doing now across wide swaths of the economy. And it will be years before the mess is cleaned up.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Bloomberg News reports that employers slashed 80,000 jobs in March. This accelerates the rate of monthly job cuts -- 76,000 lost their jobs in March -- and boosts the unemployment rate -- at 5.1% it's the highest since September 2005 when it was 4.8%.

The jobs hits are coming from the automobile, construction, and financial industries. 24,000 jobs were lost in the auto manufacturing and parts industries; builders eliminated 51,000 jobs after a decline of 37,000 in February; and Wall Street banks hit by mortgage losses and write-downs have cut more than 34,000 jobs in the past nine months.

Nobody really knows how bad the layoffs will get. But Fortune reports that there's no magic wand that can help you if you've been laid off. It advises people to "step back, take a deep breath, and take a careful look at your career -- to re-evaluate your goals in life. What do you really want to do next? Maybe it's time to move on to something completely different. This is your chance to find out."

In the next few years, many more people will be taking that chance.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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.

This morning's report that U.S. jobless claims rebounded suggests that the economy may be slowing down. But Merrill Lynch & Co.'s (NYSE: MER) decision to clean house in its fixed income division tells us one source of future job losses.

Initial jobless claims rose by 16,000 to 317,000 in the week ending September 29, marking their highest level since September 8. Many of those job losses were undoubtedly related to the housing slowdown. Certainly an estimated $4 billion loss in housing finance -- in the form of too many subprime mortgages -- led to Merrill's canning of its global head of fixed income, Osman Semerci, his deputy, Dale Lattanzio, co-head of fixed income for the Americas and their former boss, Dow Kim, the former co-head of institutional securities.

Does Merrill's decision -- coupled with some 3,400 jobs cut already -- mark the beginning of a multi-year Wall Street slump? As DealBreaker posts, BreakingViews [subscription required] pointed out that more Wall Street heads could roll. 20% of New York City's financial workforce got the boot in the two years after the 2001 downturn. A 20% decline over the next few years would litter Wall Street with the blood of "40,000 Big Apple financiers."

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Merrill Lynch securities.

Jobless claims last week unexpectedly fell to 293,000, down 5,000 from the previous week. Economists had been expecting that the weakness in housing would spread to other parts of the economy. However, this latest report indicated that they may be waiting for quite some time.

This report seems to also clearly support the Fed's position that the subprime mortgage crisis is largely contained and is not spreading to the rest of the economy. Dr. Bernanke described this in detail in a speech that he made today. The Philly Fed Report also came in better-than-expected.

The combination of the Bernanke speech, the Philly Fed report and the Jobless Claims report also seemed to put cold water on any hopes by Wall Street for a rate cut in the near future. The economy is still slowing, however, slow growth is still growth. It is not the beginning of a recession which would necessitate substantial rate cuts.

Chairman Bernanke has made it abundantly clear that he will let the economic data dictate changes in the Fed's position rather than anticipating the changes. Wall Street would be well advised to remember this point. It is much more profitable to follow rather than to fight the Fed.

Doug Roberts is the Founder and Chief Investment Strategist for FollowtheFed.com, an investment strategy that uses the Federal Reserve's impact on the stock prices. He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.