Dec 20, 2007 7:10 am US/Central
More People Sign Up For Unemployment Benefits
Increase Was Larger Than Expected
3rd Quarter GDP Grows, But Will Slow
WASHINGTON (CBS) ―
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The Labor Department reported Thursday that new applications filed for jobless benefits rose by a seasonally adjusted 12,000 to 346,000. (File)
AP
More people signed up for unemployment benefits last week, suggesting that the job market is softening as the economy loses speed.
The Labor Department reported Thursday that new applications filed for jobless benefits rose by a seasonally adjusted 12,000 to 346,000. It was a larger increase than economists were expecting. They were forecasting claims to rise to 335,000 last week.
The four-week moving average of new claims for unemployment benefits rose by 4,250 to 343,000 last week, the highest level in two years.
Economic growth in the October-to-December quarter is expected to slow to a near crawl - a pace of just 1.5 percent or less, according to economists' projections. The nation's unemployment rate, now at 4.7 percent, is expected to climb to 5 percent by early next year.
Meanwhile, the Commerce Department reported Thursday that gross domestic product grew at a 4.9 percent pace in the July-to-September quarter, unchanged from an estimate made a month ago. The performance was especially impressive given that the housing market plunged deeper into despair. Builders slashed spending on housing projects in the third quarter at an annualized rate of 20.5 percent, the most in 16 years.
The economy's growth in October through December is expected to have slowed to a pace of just 1.5 percent or less. Gross domestic product measures the value of all goods and services produced within the United States.
The big worry is that individuals will cut back on their spending and throw the economy into a recession. Former Federal Reserve Chairman Alan Greenspan and others say the odds of that happening have grown this year. Greenspan recently warned that the economy is "getting close to stall speed."
To rescue the economy, Fed Chairman Ben Bernanke and his colleagues have sliced a key interest rate three times this year; those moves dropped that key rate down to 4.25 percent, a two-year low. Still, Bernanke has been criticized for not moving more quickly and aggressively to deal with the problems.
The collapse of the once high flying housing market, a mortgage meltdown and a painful credit crunch, have propelled home foreclosures to record numbers. The problems have forced banks and other financial companies to rack up multibillion-dollar losses, have unnerved Wall Street and have the Bush administration and the Democrat-controlled Congress accusing each other of not doing enough to stem the crisis and scrambling for solutions to curb the fallout.
Credit problems have made it harder for people to get financing to buy a home, aggravating the housing slump. The inventory of unsold homes continues to pile up, forcing builders to cut back even deeper on construction projects. Home foreclosures and late payments are expected to get worse. The troubles in housing are expected to drag on well into next year, acting as a weight on national economic activity.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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